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Everything just changed in the angel investing world.

Two years ago Yuri Milner, through his investment firm DST, disrupted the traditional Silicon Valley venture capital model when he began investing in the hottest startups – companies like Facebook, Zynga and Groupon – at very high valuations and extremely easy deal terms. He looks brilliant in hindsight, with all of his U.S. investments at significantly higher valuations since he invested.

Most top VC firms have begun emulating DST’s deal structure.

Now he’s partnering (as an individual, not as part of DST) with Ron Conway’s angel fund, SV Angel. And they’re making a bold investment move. This evening they’ve just made a blanket investment offer to every Y Combinator startup in the most recent batch. They’re going to invest in all of them. Every single one. And this is the biggest Y Combinator class to date – some 40 new startups.

They haven’t even seen most of the startups yet. This is a bet on the quality of Y Combinator startups in general.

All of the new Y Combinator entrepreneurs gathered at Y Combinator headquarters in Mountain View California on Friday evening to hear about the offer, They weren’t told why they were supposed to be there, just that something important was happening. The SV Angel team was there in person. Milner joined from Europe by video conference.

The terms? $150,000 in convertible debt. With no cap and no discount. If you’re an investor you know exactly what that means and you just shuddered a little. Those aren’t terms that most angels can’t match.

If you’re not an investor, here’s what it means. Yuri and SV Angel just offered to loan each company $150,000. That loan will convert if/when the company raises a proper angel or venture capital round at the same valuation that’s set in that round. Most convertible debt has a valuation ceiling and also gets a discount on conversion. This debt doesn’t.

It’s the most investor friendly investment that I can think of, short of just handing people money as a gift.

Each startup can choose to take the investment or not. If all 40 of the startups accept the loan then a total of $6 million will have been invested. And Milner/SV Angel say they intend to offer this for each Y Combinator startup in the future, too. That means Y Combinator entrepreneurs will not only get the $15k – $20k from Y Combinator during the first few months of their project, but they can look forward to another $150,000 a few months later. That’s usually enough to complete development and launch a product.

This is a huge win for Y Combinator, and cofounder Paul Graham seemed very pleased when we spoke by telephone this morning. He also says it’s a smart investment strategy. If only a couple of the startups have a large liquidity event it’s likely to be a good investment for Milner and SV Angel, he noted. “This is a hits driven business,” he said.

This also spreads incredible goodwill throughout the young entrepreneur community.

This also puts Y Combinator further ahead of competing early stage incubators/investors. Entrepreneurs now know they’ll be offered easy terms on $150,000 in capital just for being part of Y Combinator. That’s an incredible marketing advantage.

This is not such a big win for other angel investors, who are still struggling with business models and rising valuations. They tend to mob Y Combinator startups generally. And now they’ve got to deal with startups that don’t need cash as desperately, and who already have Milner and SV Angel as investors. That’s two more steps behind than they were before.

SV Angel says that this is a separate process from their normal investing. They’ll invest additional sums in some of the Y Combinator startups just as they always have. They’ve already invested in two from this batch so far, says SV Angel Managing Partner David Lee, and it’s extremely early in the process.

Blekko, the search engine that is fighting the good fight against web spam with human editors, is joining biggies Google and Bing in the mobile search arena today with an Android and iPhone application double whammy. Says Blekko CEO Rich Skrenta, “In a world where people want the most relevant answers on the go, mobile search is becoming increasingly more significant.”

The app has a sparse interface which allows you to view search results whether or not you are logged in with your Blekko account. With the exception of Facebook integration, the app pretty much runs the gamut of features found on Blekko itself, most notably the ability to search by /slashtag or curated topic. Results are sorted by most relevant and by date.

The app also offers suggested slashtags for each search at the top when you scroll down on a search. For Blekko power users, an interface with the buried treasure features of “Mark as Spam””View SEO info””Add to Slashtags” and “Open in Safari” can be accessed by clicking on the arrow next to each individual result in your search and then clicking on box/arrow icon the bottom right corner to reveal further options (see the image on the right, above).

Blekko, which boasts more than 100,000 slashtags created after its launch in November, has raised $24 million from VC superstars like Ron Conway, Mike Maples, Jeff Clavier and Marc Andreessen and most recently actual superstars like Ashton Kutcher.

As of today the app is free in the App Store and Android Market.

Ever wish Angry Birds had more poop in it? Well look no further than the App Store today, as Apps Genius has launched Angry Turds. As a monkey in Angry Turds, you get to battle evil island explorers who have stolen your monkey babies with various projectile weapons.

The concept is similar to Angry Birds as your objective is to throw stuff but the stuff here goes beyond rocks to coconuts, turds, banana bombs and grand poop-bas (I am so glad I never spent any money getting a journalism degree).

Angry Birds addicts will be happy to discover that the touch action of throwing objects is exactly the same as in Angry Birds except there’s no slingshot. The weapons themselves each have varying properties in terms of force and levels of destruction per throw.

What’s even more amazing than the fact that someone made this is that the App Store thinks that the word “turds” needs censorship (as in “Angry T*rds for iPhone”) but the word “poop” is as clean as the Pope himself.

For example:

“There is only one way to stop them, throw some t**ds! With your arsenal of t**ds, coconuts, poop bombs and bananas”

On why he chose this specific name and concept, Apps Genius CEO Adam Kotkin told us “People are into the whole poop thing. When you speak with a 12 year old you realize that they know more than the rest of us … It’s fun to throw poop around. Poop sells.”

Angry Turds is available in both free and $0.99 paid versions, with 10 levels and 30 levels respectively, in case you need to step your turd game up. You can download the app here.

I love asking companies if the timing of events is on purpose or purely coincidental. Not only do they almost always say that it’s purely coincidental, but they often try to claim that didn’t even realize a rival was also doing something when they made their plans. Sure.

Next week will feature another such situation. Earlier this week, News Corp. and Apple sent out press invites for an event to unveil the new iPad-only app, The Daily. And then this evening, we’ve just received an invite to a Google event to show off the latest version of Android, Honeycomb. The one meant for tablets. And guess what? They’re on the same day.

Sure, the events are on different sides of the country (though word is that News Corp./Apple had originally wanted to host their’s in the Bay Area too). And as such, the iPad event will be slightly earlier than the Android event (8 AM PT versus 10 AM PT). That doesn’t matter. The key is that controlling the news that day will be paramount for both sides. And Android just press-blocked the iPad.

The events are timed and situated in such a way that it would be absolutely impossible for a journalist with invites to each event to go to both. And while Google is being nice enough to host a live stream on YouTube (something which News Corp./Apple will almost for sure not do), it will still be a pain to extensively cover both. You’ll basically have to choose.

Normally, it would be all iPad next Wednesday. Now it’s likely to be more Android-controlled. And don’t think there’s nothing to the fact that Google is showing off a “taste” of Android shortly before the iPad 2 is expected to be unveiled.

War.

For decades, my mother and grandmother have both religiously scanned the weekly coupon books and circulars that arrive in the weekend newspaper. While clipping coupons can be tedious, grocery stores’ weekly deals can often take out a significant chunk of change of the weekly food bill. Of course, as print couponing becomes obsolete, many consumers are looking to the web for deals at their local grocery stores. Today, Y Combinator-backed AnyLeaf is launching its intelligent grocery deal aggregator to the public.

AnyLeaf scours local grocery store sites in the San Francisco Bay area and aggregates all the deals from these stores, including CVS, Lucky, Nob Hill, Raley’s, Safeway, Target, and Walgreens. You simply enter your zipcode and email address, and AnyLeaf will send you a weekly email with deals from the local grocery stores near you.

And what sets AnyLeaf apart from other grocery store deal aggregators is that it applies an intelligent algorithm to sourcing deals for users. You can specify that you don’t want to see deals on specific food items and products, and after your start interacting with AnyLeaf’s site, the service will start recommending similar items to those you have chosen to see deals for. And AnyLeaf collects historical prices for food items and will also show you how steep a discount is compared to past discounts from grocery stores.

For now AnyLeaf is limited to the Bay area but plans to expand to other cities in the near future. For any Trader Joe’s fans out there, AnyLeaf doesn’t aggregate deals from the popular grocery store chain because the company doesn’t post sales publicly on the Trader Joe’s site.

Personally, I would pay more attention to grocery deals at the stores where I shop if I received comprehensive lists of weekly deals via email. I’m keeping my fingers crossed that Chicago is AnyLeaf’s next expansion!

Sometimes, all it takes is a little spark to set off a major forest fire. That is what seems to have happened with my New Year’s Day post on Why We Desperately Need a New (and Better) Google. Over the last two months, there has been an avalanche of articles echoing my post (and a few before it from notable people like Jeff Atwood), including New York Magazine, Business Insider, GigaOm, TechCrunch, CNN, and The Wall Street Journal.

I had a feeling that this would get Google’s attention. And I had the same concern as when I challenged the Russian government, once, in a Bloomberg BusinessWeek article about Skolkovo (a new tech park). I feared that Google would either blacklist me or do its equivalent of putting me in a Gulag—deliver even more spam when I search websites.

But I was delighted to get an e-mail from Amit Singhal, the head of Google’s SEO team. His message was exemplary for those wanting to learn how to handle a PR crisis. Here is part of what he wrote:

I read your post on TechCrunch yesterday and was quite disappointed by the fact that Google search failed your students at their task. My team and I treat every such failure as an inspiration to improve Google. Would it at all be possible for me to get a few queries from your students for which our algorithm failed? We will debug every aspect of our system for those queries.

He went on to invite me to visit Google to show me how they run the search system and listen to any other criticism I had to offer.

I took Amit up on this and spent hours with him; with Matt Cutts, who heads Google’s webspam team; and with their lead developers. They were incredibly open and honest. They acknowledged the deficiencies of Google search, shared ideas on how they plan to fix them, and asked for feedback.

I raised concerns that “content farms” are turning the web into a massive garbage dump, that many sites are simply replicating the content of others like TechCrunch, and that Google has no incentive to stop this because it gains advertising revenue from the spammers.

The Google developers assured me that there is a very high Chinese Wall between them and the business side of the company; that they have been instructed by Google’s executives to do only what is in the interest of users—to keep improving quality of search results and the user experience. They said they understood the issues and had many solutions to the technical problems. I questioned whether the spam problems could even be solved algorithmically; whether the only solution was a curated web-search model like that of Blekko and DuckDuckGo. They convinced me that they could, and would, win the battle.

Matt said he would post a blog, which he did, on Jan 21. In it, he explained that Google had already made improvements to make it harder for “spammy on-page content to rank highly”; had radically improved its ability to detect hacked sites, which were a major source of spam in 2010; and was about to implement a change that would directly address the issue of sites copying others’ content. Most importantly, he acknowledged that something had to be done about the “content farms,” and said that Google would.

Not surprisingly, Matt’s blog led to another avalanche of media coverage. As it turns out, the biggest content farm of them all, Demand Media, was set for an IPO this week (on Jan 26).   Savvy bloggers and journalists began to question whether it could sustain its profits without Google’s support. The Wall Street Journal asked Did Google Just Make Demand Media Less in Demand?, and GigaOm wondered Did Google Just Declare War on Demand Media?

Nonetheless, Demand Media had a spectacular IPO. Its investors reaped huge bounties, with the company achieving a market cap of $1.7 billion—valuing it higher than the New York Times. So the public markets rewarded junk over quality. And they called Google’s bluff.

Where does that put us? Do we have to watch the web become one big toxic waste dump—as the spammers rake in billions of dollars? Or will Google indeed save the day?

There is an event on Tuesday, Feb 1, called Farsight 2011: Beyond the Search Box, to discuss these questions. It will be live-streamed on TechCrunch (watch for a post by Jon Orlin on that day) and is being organized by BigThink, a public online forum for intellectuals (people like Gary Kasparov, Jimmy Carter, Malcolm Gladwell, Salman Rushdie, Nouriel Roubini, and Paul Krugman). BigThink has thousands of videos on its site, which 1.5 million people watch every month.

I am emceeing the BigThink event and moderating a panel with three big players: Matt Cutts from Google; Harry Shum, Microsoft Corporate Vice President who heads Bing development, and Rich Skrenta, founder and CEO of Blekko.

Here are some questions that I plan to ask the panelists. Please share your comments below and suggest additional questions. I can’t promise I’ll cover all the topics you raise, but I will bring up as many as I can.

1. How will they save the web? Is it possible for search engines to separate the wheat from the chaff—tell the difference between content produced by regular people and large-scale junk produced by the spammers?

2. How are the engines really different? Most people can’t tell the difference between Google and Bing. Where is the magic?

3. What lies ahead? What is the future of search?

I have no doubt that this will be a very lively and informative event.  There are also other great presentations such as:

• Jaron Lanier, named by Time Magazine in 2010 as one of the 100 most influential people in the world, speaking about the need for a new sustainable revenue model for search.
• Esther Dyson, in an address entitled “The Future of Search is a Verb,” speaking about how we want search to help us do something—a set of many verbs.
• Demos from Blaise Agüera y Arcas, Architect of BING maps at Microsoft; and Luc Barthelet, Executive Director of Wolfram|Alpha.

I hope you’ll tune in.

Editor’s note: Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School , Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University, and Distinguished Visiting Scholar at The Halle Institute for Global Learning at Emory University. You can follow him on Twitter at @vwadhwa and find his research at www.wadhwa.com.

Meetup, a long time go-to place to create local online groups, has undergone a major re-launch in the past day. However, it may have missed a trick: not consulting the meetup organizers who pay through the nose for the service. There now appears to be something of a revolt going on amongst some organisers, who are vociferously protesting about the changes.

The reaction of annoyed organisers and members has turned into two, count-em, Twitter hashtags: #newmeetup and #meetuporganizersunite.

Alternatives to Meetup like BigTent are being touted, as is GroupSpaces – a startup which last year raised $1.3 million from the likes of Index Ventures and Angels like Dave McClure and Chris Sacca. It is is already gunning for “FormerMeetupOrganizers” with its own group and a blog post on the subject.

This week’s Ask a VC has a different twist, since we had a different kind of VC on the show, John O’Farrell Andressen Horowitz’s guru on business development and deal-making.

The questions you asked O’Farrell are below. As usual, feel free to watch the whole show or use the links to skip ahead to your question.

About an hour ago, Ina Fried over at Mobilized posted that Google would be hosting an event next week to show off the latest version of Android, codenamed “Honeycomb” a bit more. Sure enough, an invite has just landed in our inbox.

The invite reads:

A Taste of What’s New from Android

You’re invited to an Android event at Google headquarters in Mountain View on Wednesday, February 2. Please join us for an in-depth look at Honeycomb, Android ecosystem news and hands-on demos.

It will take place from 10 AM PT to 1 PM PT, but the event itself will be about 90 minutes, with the rest of the time used for demos.

More importantly, the entire event will be streamed live on YouTube at this URL.

This event follows Google’s recent release of a preview version of the SDK for Honeycomb. And back in January, they released a preview video of the new OS.

No word on who will be on hand to show off Android 3.0 at this event yet, but Andy Rubin is a safe bet. More interesting will be if soon-to-be CEO Larry Page shows up as well.

More: War Maneuvers: Android Event Will Battle iPad Event For Press Love On February 2

Probably sick of countless press emails asking for an official stance on the countless controversial hyper-mediated events like WikiLeaks and the Tunisan and Egyptian uprisings now being amplified through Twitter, co-founder Biz Stone and Twitter General Council Alexander Macgillivray have co-written the polemic “The Tweets Must Flow” essentially arguing that freedom of expression is a human right.

Key takeways:

*“On a practical level, we simply cannot review all one hundred million-plus Tweets created and subsequently delivered every day.”

*“We keep the information flowing irrespective of any view we may have about the content.”

*“While we may need to release information as required by law, we try to notify Twitter users before handing over their information whenever we can.”

*We’re hiring.

Stone and Macgillivray did not explicitly mention any one particular incident in the post but obviously hinted at recent news events with pointed language like “some tweets may facilitate positive change in a repressed country,” (Tunisia, Egypt) and “While we may need to release information as required by law, we try to notify Twitter users before handing over their information whenever we can” (which is exactly what the company did recently when the DOJ asked for data from WikiLeaks supporters).

Emphasizing Twitter’s transparency, Stone and Macgillivray state that Twitter has been submitting all tweet removal notices to @ChillingEffects which is releasing them through @ChillFirehose. @ChillingEffects is a project lead by the EFF, Harvard, Stanford and other universities meant to raise awareness of online rights and protections with regards to copyright issue, etc . They also mention that Twitter has a Twitter list devoted to “Freedom of Expression” which includes the ACLU, IP Justice and internet monitoring service Herdict.

Twitter’s Sean Garrett tells us that the post is the result of a year of mulling over important geo-political issues that Twitter is now an unlikely player in, “We thought it important for us to explain our principles for both big things like being blocked in China to much more specific decisions like a DMCA request over a single Tweet. Recent big global events vividly demonstrate the implications of this approach.”

Indeed, the Twitter legal team now lead by Macgillivray has found itself in all sorts of unprecedented legal situations as the service scales, anything from a Courtney Love libel suit to a subpoena from the Pennsylvania Attorney General.

Biz Stone has written on Twitter and activism before, in response to Malcom Galdwell’s assertion that there is no such thing as  Twitter activism (I can’t wait to see what Gladwell has to say about the past two weeks). And while this is the first time I’ve seen Macgillvray write on Twitter issues, something tells me it won’t be the last.

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Here’s more evidence that regular people have zero time for things like Google TV, Boxee, and Roku, if only because they’re too complicated for their own good. Hill Holiday, a “caffeine-fueled ad agency,” asked five Boston-area families to participate in a cord-cutting experiment. For one week each family was asked to forgo traditional cable TV in favor of one of the following devices: Apple TV, Google TV, Boxee Box, Xbox 360, and Roku. These devices, of course, are the premier devices for people looking to break free of their cable company while still being able to enjoy television. And how did it turn out for these five families?

Read More

A Santa Cruz-based electric motorcycle manufacturer, Zero Motorcycles, raised another $2.4 million in private equity, according to a new SEC filing.

Earlier this month, California’s Scotts Valley Police Department started using the company’s Zero DS bikes in urban patrols. According to a company press statement, its Zero DS has a range of up to 50 miles (80 km) and is highway legal, safe for off-road bike paths, and drives quietly due to its all-electric drivetrain, making it potentially advantageous for urban law enforcement.

In late 2010, Zero Motorcycles expanded sales of its all-electric bikes to Australia. The company is selling its products in 32 countries today, including the U.S., Switzerland, Germany, Italy, the U.K. and Canada.

Last summer, Zero Motorcycles attained a U.S. patent for a battery interconnect system that reduces the amount energy wasted in the form of heat around the power packs that go into their bikes.

Zero’s competitors include fellow American startups Brammo and Mission Motors, and major bike companies like Honda and BMW that have committed to put out all-electric models, too.

In 2008, Zero Motorcycles raised about $8 million, and in 2010 the company raised another $7.1 million in what appear to be several expansion rounds, bringing the company’s total equity raised to about $17.5 million today.

TechCrunch has requested details about how Zero Motorcycles will apply its latest financing round of $2.4 million. The company did not offer an immediate reply.

This is sure to cause a backlash among Indian online merchants. Due to restrictions from the Reserve Bank of India, PayPal has amended its user agreement for Indian merchants, imposing a number of restrictions on merchants using PayPal as an online payments mechanism. Now Indian merchants will not be able to accept payments via PayPal that are above $500 per transaction. As stated in PayPal’s blog post announcing the change, “For purchases or payments above this transaction value, you will have to use an alternative payment method.”

The fact that Indian merchants won’t be able to receive payments above $500 per transaction is a big blow to entrepreneurs in the country. As one anonymous developer tells us, “we’re fucked.”

And PayPal is requiring that any payments into merchants’ accounts cannot be used to buy other products has has to be transferred to and Indian bank account with 7 days from the receipt of confirmation from the buyer in respect of the goods or services.

It’s important to note that these restrictions aren’t being imposed by PayPal, but rather by the Reserve Bank Of India. The restrictions will take effect on March 1, 2011.

This isn’t the first time the RBI has imposed restrictions on PayPal. Last year, PayPal had to suspend personal payment transactions from and to India temporarily, when the RBI concluded that PayPal was not in compliance with all relevant regulatory requirements. Shortly afterwards, PayPal removed the ability for Indian merchants to withdraw funds from accounts electronically in compliance with regulatory instructions.

And some think this is the beginning of the end of PayPal in India.