Even Google can’t save Angel Investors

(UPDATE: A source slipped us a copy of the sale document. We include it as an example of how complex these secondary transactions can be. And here’s Conway’s letter to investors.)

Remember Ron Conway, the Palo Alto socialite who launched a venture fund called Angel Investors at the height of the dot-com craze, invested millions into scores of Silicon Valley Internet companies, only to watch most of them go out of business?

Well, he’s finally selling the remnants of his holdings to Credit Suisse First Boston, in a so-called “secondary market” transaction. The deal is just about wrapped up; he’s simply waiting approval from his all-star investors — people like Arnold Schwarzenegger, Tiger Woods, Henry Kissinger, Netscape founder Marc Andreessen, eBay co-founder Pierre Omidyar, the list goes on — who, we might add, may not be too happy…

Basically, CSFB will take ownership of Angel’s remaining interest in its private company portfolio. Conway has two funds. The first fund may have pulled through into positive territory, we’re told, because Conway invested some in Google. But the second fund’s remaining assets are being sold for about $7.8 million. Bottom line: Conway’s investors will have gotten back slightly more than half of the money they invested in that fund — even though Conway invested a small amount from it in Google too (the amount, in this case, was too small to compensate for the other losses in the Angel II $150 million fund, and also Angel II made the investment in Google later than the one made by Angel I, meaning it bought at a higher price).

Conway’s come a long way. In the early days, before the crash, Conway boasted to writer Gary Rivlin that he’d earn a return of 1,000 percent on his investments. But by the time Rivlin finished writing his book about Conway, called “The Godfather of Silicon Valley,” Conway confessed he’d be lucky just to get back his money. So it looks like Conway was lucky indeed. It’s been a wild, wild ride. If there’s a symbol for the closing of the chapter on Internet hubris, this may be it.

UPDATE II: Edited to correct Conway’s place of residence: He now lives in Palo Alto.