Co-investing with VCs in Angel Rounds
| February 15, 2010 |  View for printing |
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/Interna ... Rounds.aspx 
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