At NASVF, our observation is that angels and seed stage venture capitals are increasingly working together to help grow promising entrepreneurial ventures. In fact, frequently, venture capital professionals actually join sophisticated angel groups in helping identify, vet and mentor such firms in anticipation of providing the next stages of funds if the companies meet projected benchmarks. Since institutional venture capital concentrates more than 80% of its funds into expansion and later stage deals, there might be a dearth of deals to look at without the angels participation.

I am the individual that led the particular Angel-VC panel that the reporter has referenced and where various individual were quoted. Unfortuntately the reporter missed the nuance of what was being said and the whole point of the panel.

For example, what Mr. Carsten said, was that some angels join specific angel groups for primarily social reasons, ie. they may not be check writers. Every angel group member knows that this is an issue in angel groups. Furthermore, he made the point that if you don't do the hard work of being involved and help the companies that you invest in, you probably won't wind up with good returns. Of course every angel investor (check writers) want good returns but many are naive about what it takes. The contention that is referenced in the article is fallacious and unfortunate. Mr. Carsten was accurate in his comments.

With respect to Mr. Driscoll's comments, he is also correct that some angels do choose to price rounds and overvalue the companies in which they invest - making follow-on financing problematic. In a study conducted last year of what VC's find most troubling with angel investors, they cited angel tendency to overvalue deals. Independent of the reasons for the angel tendency (at least in the past) to do this and Ted's observations on the reasons why, Ted is fundamentally correct on this being an issue.

The good news is that in a September 18th press release, the ACA (Angel Capital Association) reported that 74% of angel group leaders thought that the relationships between VC's and angel groups had improved in the last three years. Half of the groups reported syndication and/or follow-on investment with VC firms in the first half of 2007. The panel participants were all VC's that were also members of angel groups trying to accelerate this desirable investing behavior. With the continuation of this trend, we will see more venture capital deployed to seed and early stage opportuntiies.

I invite the reporter to contact me for interpretation of what they think they heard and I will be happy to clarify and set the record straight.

I'm disappointed that my comments supporting angel financing and how VCs and Angels can benefit each other were totally ignored. I can assure Stacey that Claremont Creek Ventures is very friendly to angels, since every member of our partnership is also an active angel. I have no idea what she means by "angel turf". In my experience, there are more deals than there is money to fund them, and turf is not an issue. Whenever my VC fund has found itself investing alongside angels, we have been happy to work with them.

Finally, I've just posted on my blog a longer explanation for why I believe angels should use convertible debt to finance startups and avoid priced rounds. See evolvingvc.blogspot.com.

I don't think Angels "overvalue" deals any more than VCs do.

I fully understand the comment about "angel turf". Some VCs are starting to play in the

Thank you for all your comments. As the reporter who covered the panel last week, I was not trying to single out any specific VCs. Indeed, I tried to stress that all of the VCs who took part on the panel were VCs who did -- or had in the past -- worked with angels.

However, there was considerable discussion during the panel about why these two groups don't work together more and many of the comments made clearly show that a level of suspicion remains between angels and VCs.

For example, the matter of valuing young companies and whether angels know how to do it, has been an issue since before 1999, but it surfaced again last week as a number of the VCs on the panel said Angels lacked skill in this area.