News

Co-investing with VCs in Angel Rounds

I read a blog post by Bill Burnham this week entitled "Don’t Take Angel Investment from VCs" http://matr.net/article-37934.html. He gave the following example to make his point (my paraphrase): An angel/VC that invested in the angel round tried to pre-empt the Series A fundraising in a company with a low-ball term sheet. The entrepreneur thought he could do better and politely told the angel/VC “thanks, but I’d like to test the market”.

The response was swift and furious. The angel/VC told the entrepreneur he had to accept the offer or the angel/VC wouldn’t invest in the Series A round – dramatically reducing the chance of raising money because other VCs would assume that the angel/VC wasn’t investing was because there was something wrong with the company.

Burnham’s post makes a great point: Entrepreneurs should complete due diligence on all investors and not take money from bad investors. Unfortunately, bad investors come in all flavors – angels, VCs and other private investors.

by: Bill Payne

Full Story: http://www.theicehouse.co.nz/Internal/InternalBlogs/AngelsBlog/tabid/236/EntryId/57/Co-investing-with-VCs-in-Angel-Rounds.aspx

Posted in:

Sorry, we couldn't find any posts. Please try a different search.

Leave a Comment

You must be logged in to post a comment.