What VCs see when they picture hedge funds.

While investment banks jockey to become the lead underwriter for the next hot new tech IPO and broker-dealers dip into the secondary market for Facebook stock, another Wall Street contingent has been barreling its way into the tech sector.

According to the Wall Street Journal, hedge funds with a hunger for tech stocks and seeking higher returns are increasingly investing in private start-ups. If you ask some venture capitalists, this is A NO GOOD VERY BAD THING.

Jeff Clavier, founder of SoftTech VC, a small, but influential Palo Alto firm told the Journal:

"Hedgies investing in start-ups directly is scary. They are the antichrist of patient, supportive early-stage investing."

For example, the paper cites New York-based hedge fund Tiger Global Management, which invested in two massive funding rounds recently: LivingSocial's $400 million round in April and Square's $100 million round in June. A quick look at Tiger Global's Crunchbase profile shows that it's not just investing in marquee names. But after buying large blocks of Zynga and LinkedIn on the secondary market in 2009, its also invested in GetJar and a number of Indian web start-ups. Meanwhile, Edward Lampert, a hedge funder who controls Sears Holdings Corp., attended two TechStars events to hear entrepreneurs' pitches.

The problem, of course, is that hedge funds don't have a venture capitalist's long-term view or interest in mentoring young companies. They're seeking higher-returns and "can sell at a moment's notice." The fact that they're pushing already frothy valuations to sky-high extremes is also rocking the VC boat. But some start-ups are getting over their skepticism for outsiders and considering the upside of a hedge-fund investor. Namely, a Rolodex of other big wig investors, oh yeah, and piles and piles of cash.

Tiger led GetJar's $25 million round in February and CEO Ilja Laurs says he appreciates its passive influx of capital, which came without the demand for a board seat. "An IPO used to be the only way to raise more than $100 million," he told the Journal. "If you need less than $1 billion, there are alternative sources available" now. For some VCs, that probably sounds like the end of days.