Should you take VC money or Angel money?

I meet with a lot of entrepreneurs, and invariably this question always comes up in one form or another.  I think I have a pretty good perspective on this because I've been on all three sides of this question: 1) a professional VC, 2) an angel investor and 3) an entrepreneur facing this question for my own business.

There are both pre-investment issues and post-investment issues to this question.   Post-investment is a lot more nuanced and maybe I'll tackle it in the future, but not right now.  The pre-investment issue can be summed up very simply:

Raising angel money is like trying to find a date on Hot Or Not.  Raising venture money is like trying to find a life partner on eHarmony.

If you're "hot" (like this picture of Miss America 2008), you'll very quickly get lots of dates / investors.   

You may not ultimately like the dates you get, because they only like you because you're "hot", and if you stop being hot they move on pretty fast.  And always remember that different people find different looks "hot", like this picture of a New Guinea tribal woman doesn't appeal to me but I'm sure it does to New Guinea tribal men.

If your business is something that people well-schooled in the industry and market you are going after would find really exciting, AND you have the time and patience to spend a lot of time getting to know each other (because it will take a while),  then you may be better off going after professional VCs who know your market and are looking for long-term relationships (i.e. submit your profile on eHarmony).  For example, Tina Fey's humor, intelligence, style and looks aren't for everyone, but they sure do work for me (which I've fully disclosed to my wife!)

Food for thought when picking an investment route....a fun way to think about a serious topic!

NOTE: I fully disclose that I'm plagiarizing this concept from someone else, but I can't remember where I heard it so I can't give appropriate credit, so Thanks to whoever said it first.

Comments

[Paul Rodrigues]

Note Re: the note.
Guy Kawasaki has brought up the HotOrNot analogy before, maybe it's him you're thinking of?

[Lou Friedmann]

I finally got around to a comment on this hot topic for me. 1) I think angels are acting more sophisticated, professional than before...especially angel groups, so my experience is that the line is blurry now. Not sure if this is due to economic conditions. 2) Tina Fey all the way. For the record, my wife knows that she is on the contingency list.

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I think angels are acting more sophisticated, professional than before especially angel groups, so my experience is that the line is blurry now.

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I think angels are acting more sophisticated, professional than before...especially angel groups, so my experience is that the line is blurry now. Not sure if this is due to economic conditions.

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