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VC vs. Angel Money: A Primer

Don't blow a financing opportunity by approaching the wrong source.
January 20, 2009

As a venture capitalist, I get approached several times a day by entrepreneurs looking to raise money. One of my typical responses is, "You shouldn't be talking to me; you should be targeting angel investors."

The source of this confusion varies: Sometimes it's a misunderstanding of the different roles and expectations of a venture capitalist vs. an angel investor. Other times it's a lack of clarity on the part of the entrepreneur regarding what he or she wants to accomplish with both the business and the financing. Regardless of the source of the confusion, here are a few guidelines for determining whether you should be approaching venture capitalists or angels for your financing.

As with all guidelines, there are plenty of exceptions. One seems to hold in most angel financings: the rule of thirds. A third of your financing will come from one investor, the second third will come from a set of people following that investor and the last third will be random. So make sure you go hunting for your lead investor.

Brad Feld has been an early-stage investor and entrepreneur for more than 20 years. He is a co-founder of Foundry Group, an early-stage VC firm. Brad blogs at and, runs marathons and lives with his wife and two golden retrievers in Boulder, Colorado, and Homer, Alaska.