VentureBeat

It’s no secret that there are plenty of cowboy outfits in the venture capital world, including scores that were started before the tech bust. But in the weightier circles of late-stage venture investment, there’s supposed to be less risk, and therefore fewer seat-of-the-pants operations. Which makes Advanced Equities, a Chicago firm fingered by Forbes in a recent expose, all the more notable.

AE is run by a pair of former stock brokers, Keith Daubenspeck and Dwight Badger, who built it in 1999 to invest in tech. But unlike the flawless pedigrees of many VCs, Forbes notes that the two are, respectively, a community college grad and a college dropout. (Perhaps telling of certain prejudices in the financial community, Forbes also chose the title “Garbage In…” for the piece.)

Here’s the outline of AE’s business plan, according to Forbes: First, find a high-profile venture capital outfit like Kleiner Perkins, Khosla Ventures or New Enterprise Associates to work with. Convince clients to give you money, based on the respectability of those firms. Then pour the money into hugely overvalued deals with later-stage firms in the portfolios of said VCs, afterward skimming hefty fees until the firms go public or, far more likely, collapse.

Valuations aside, it’s true that AE is an investor in plenty of high-profile names. In telecom, for instance, it has put money into Infinera and Turin Networks, both still operative. Somewhat less appetizing is the money it put into RFID company Alien Technology, which tried and failed to go public, and Agami, which folded recently, after taking $45 million only six months ago.

A possibly worse indictment against AE’s financial acumen is the money it poured into the early biofuels market, including Altra Biofuels, which raised $120 million in 2006, and Cilion, which got $200 million in what was at one point the biggest cleantech investment ever. Both were first generation ethanol companies at a time when that fuel was highly hyped, but most public companies in the same category have since lost half their value or more; one can only wonder if heavily funded private companies are doing much better.

But what Forbes is suggesting is not that Advanced Equities is simply a badly run firm. The tacit accusation is that AE is run by con-men who scam little old ladies and other clueless investors — in one example, a story is related of how 83 year old Constance Kamberos was toted out of AE’s building by security after trying to complain about her investment in the firm, while multiple other dissatisfied clients have filed suit.

Could it be that some of the most famous firms on Sand Hill, seeking to prop up previous investments, have made themselves complicit in Advanced Equities’ sketchy investing style to pump cash into risky firms like Agami? Perish the thought.

Toyota working on Segway killer — The transportation robot is called Winglet and comes in three sizes. See screenshot, via ZDnet.

Network storage company Agami shuts down — The Sunnyvale, Calif. company raised $85 million and competed against companies that went public, including 3Par. The shut-down was sudden, catching employees by surprise — apparently, a major debt-holder wanted its money back.

Illinois mandates online cancellation for game subscriptions — An Illinois family found it difficult to cancel a recurring online game subscription fee — by phone so they talked to their politician friends…. The state just signed a law into being that mandates online game companies include an option to cancel online.

Amazon buys rare-book site AbeBooks — AbeBooks is a marketplace that offers more than 110 million used or rare titles, and it has been bought by online book giant Amazon. AbeBooks is itself a minority owner in reading list sharing site LibraryThing, a competitor to Amazon-backed Shelfari.

Security company McAfee buys Reconnex — Mountain View, Calif.-based Reconnex provides business data loss prevention software; McAfee purchased for $46 million in cash. Reconnex raised $36 million.

Third time not the charm for SpaceX’s latest launch — The privately-funded space rocket startup was attempting to launch three satellites into space, but the rocket blew up minutes into the flight. That was the third launch attempt, but a fourth is slated for later this year — the company says its determined not to give up.

AOL buys Friendfeed competitor SocialThing — When it comes to services that let you share what you’re doing on various web sites within in a single interface — “lifestreaming”, if you will — I prefer Friendfeed and Facebook. AOL, meanwhile, has bought smaller Friendfeed rival Socialthing.

Flickr cofounder Caterina Fake joins stealthy startup Hunch — Fake talks about her move here, you can sign up for Hunch here.

Agami, a Silicon Valley storage company with high-profile venture backing, is doing what any self-respecting company in the sector should do these days: Raise a large amount of money before the opportunity melts away.

The company confirmed to VentureBeat that it is negotiating to raise up another round of venture capital, with regulatory filings suggesting it could as much as $50 million. The company hasn’t completed the round yet. The company competes against an array of other storage companies, including some that have gone public recently, such as 3Par (coverage). Like 3Par, Agami offers products that are compatible with virtualization, which is hot within companies right now. Many of the public storage companies, such as 3Par, are losing money.

It’s a great time to raise money or go public because investors — VCs and institutional - are still feeling flush with cash. We’re in a time when lots of money is sloshing around; all that could change quickly if oil prices and the real estate credit crunch continue to take their toll on the economy.

The company has been secretive about its previous backing. It has already raised $64 million since 2003. This round will be its third. Previous backers of Agami, according to regulatory filings, include Kleiner Perkins, along with Advanced Equities, DAG Ventures, Apex Venture Partners, Alta Partners and New Enterprise Associates.