So Michael Arrington walks in uninvited to a dinner party of a bunch of powerful angel investors and they all shut up and tell him to go away. He starts screaming collusion in a quite successful attempt to draw page views. Good for him.

Well a bunch of angel investors got together over dinner at a place that has an entry wine price of $60 a bottle. What do you expect them to talk about? Lindsay Lohan? Financers get together and they talk deals. They talk deal terms. They talk valuations. If you don't think they are talking about these things you are naive. There is even a quite popular app that enables angels to collaborate with other investors. No BFD. Get over it.

The more interesting thing is this. Right about the time Arrington was dropping his link bomb about walking into a bar local VC Alan Taetle was preparing for a panel at CapVenture. I literally sent him a text "panel fodder" with the link as he was walking to the stage. The conversation did not go that way. Instead in his closing remarks Alan stated something to the effect of  "I have never seen a as big a difference between Atlanta and Silicon Valley as I see right now."

The aftermath in the blogosphere of AngelGate is quite telling and supportive of Alan's statement. Comments like "the angel/seed market is really competitive these days, particularly in silicon valley", "the root problem (I think) is the excess of seed capital", "too many sources of money and too high valuations for early stage companies", and "angels and traditional VCs alike are fighting for deal flow" which pretty much sums up the sentiment. Somewhere in the flood of info I read about $4 million pre-money valuations on $500k seed investments. And I swear to Jobs, I have heard both a VC and angel that I respect a great deal to use the term "frothy" to describe the current environment on the West Coast.

Frothy? Only in a Guinness east of the Mississippi. So what gives?

Well this whole super angel VC debate that has been going on for about 90 days is much more than just theoretical. These dudes are going at it. Big name brand funds are swooping down and writing $500k seed round checks. They are doing this for structural reasons that need no explanation to readers of FoG. But they are doing it for another reason as well. Fear. Fear that their way of life with exotic imports, expensive wine, and hot assistants will go away along with that big fat carry if their funds do not perform. Fear is a very powerful motivator.

Here in the South the seed stage investment environment is parched. There is almost zero competition for seed stage deals (I know of one such situation in the past two years). Deals get done. But only the better ones (not a bad thing) and it takes about six months to get something closed. I do not see anything changing that in the near term. These West Coast early stage investors may decide they need to go where the deal terms are better. They may decide they need to travel. I would not bet on that behavior.

As one astute observer said the other night, "if you are portable, go." At the moment, it's hard to argue with that advice. My advice remains unchanged.  Focusing on building product and getting customers.  You do those two things and everything will turn out just fine.

With that said the real lesson of AngelGate is that there has never been as large a disparity in seed stage investing than what currently exists on the West Coast and in the South. Deal with it.