The Deal
Monday, October 13, 
1:55 pm


[Posted on March 31, 2008 - 5:22 PM]

The following is from Tech Confidential partner Ask The VC, where Brad Feld and Jason Mendelson of Mobius Venture Capital answer questions related to venture capital investment and startups:
Q: Say I have an angel (SEC accredited) who's ready to invest at an amount well below $100k. How would this impact on a future round with VCs? Is there some standard or average pre-money and post-money that happens in angel deals? Also, the angel in question is a family member of a friend, so would it be better to have them invest as a family/friend financier rather than an angel, and how exactly would that work?

A: (Brad) Let me address the last question first.  There is no real difference between a "family/friend" investor and an "angel" investor other than semantics.  Structurally and functionally they are doing the same thing.  Now - there might be an emotional difference when you have to see your "family" at Thanksgiving, but that's it.

Regarding how a VC will view this, sophisticated VCs are used to having angel investors as early investors in your company.  Your life will be made easier if you treat the angel investment as a real investment and document it legally as such - I've written about this in What's The Best Structure For A Pre-VC Investment

Insuring that your angel investors are accredited is important as this is likely one of the things that will matter to the VC.  If your angels can be specifically helpful to your company (because of their background / experience in companies similar to yours) you should make sure the VCs know about them.  In addition, you should try to enlist your angels in getting you connected to VCs that they know and have worked with.

Finally, there is no standard pre-money/post-money in angel deals.  We typically see pre-money ranges between $1m and $3m for angel deals, but they occasionally go higher and sometimes go lower.  Be careful not to price the angel round too high as the VCs are going to likely ignore the angel round pricing and - if they price their round lower - it can be a difficult conversation with the angels who supported you early on.

See March 24 post from Ask The VC


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