

Raising Angel Money - MykalMorton
http://www.bothsidesofthetable.com/2009/07/19/raising-angel-money/

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bravura
I am curious why he says that VCs don't want to invest in a company in which
the angels diluted the investor too much. Why should this matter to the VC?

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Daniel_Newby
Because there will not be enough equity left to give proper incentives to
founders and early employees.

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benologist
This is an interesting read. What happens when you're raising angel money but
don't actually expect to need additional rounds of capital?

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gyardley
Convertible debt generally comes with a time limit, at which point it converts
into equity at a pre-agreed upon price, just like if an angel had put a price
on the round. That price is usually pretty low (good for the angel, bad for
the entrepreneur), often lower than what it would've been if you'd just priced
the angel round from the start. This is because in this situation the
assumption is that you've tried to raise money from VCs and failed, implying
the company has some problems that will prevent it from scaling.

In other words, if you seriously don't think you'll need to raise from
institutional VCs, the standard convertible debt terms aren't for you.

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benologist
Thanks for that. :)

