Angel Knowledge Series
    Best Practices in
    Angel Panel: Managing VC Partners & Understanding Conflicts.

    • Ben Franklin Fund, Karen Griffith-Gryga.
    • Hawaii Angels, Chenoa Farnsworth.
    • Jefferson Corner Group, Andrea Alms.
    • Pittsburgh Equity Partners, Ed Engler.
    • Southeast Investment Group, Martin Tilson.
    Moderator: Michael Price, CEO Ventures


    1. Trajectory Conflicts due to Sources of Cash.
    - Angels' own cash leads to moderate expansion and cash preservation.
    - VCs' mostly other's cash incents them to hypergrow "fund makers".

    2. Investment Amount Conflicts due to Compensation.
    - Angels compensated by involvement in success and returns from as little cash as possible.
    - VCs compensated by Fees then Carry if lucky, so strongly prefer significant cash in.

    3. Valuation Conflicts in the Angel Round.
    - VCs willing to lose $ on overvalued Angel Round to get into next round (often causes valuation blowups).
    - Angels want low valuations in hopes they get bought out early for a good multiple.

    4. Ownership Percentage Conflict.
    - VCs want 30%+ of the A-Round in just a few companies so their exit on good ones meaningful.
    - Angels want more diversification in numbers since earlier selection odds of a good one far lower.

    5. Time Horizon Conflict due to VCs needing solid Multiple of Fund return.
    - VC backed company that gets acquired for 30 million is a failure (low impact on fund's overall multiple).
    - Angel same company with 10x exit in one year: great win and higher IRR than taking 6 years to go public.

    6. Exit Timing Conflicts due to Wallet Size.
    - VCs want exits toward the middle to back end of the hockey stick for max priced fund makers.
    - Angels often prefer earlier for a great IRR without dilution risk since later round antes unaffordable.

    7. Corporate Development Conflicts.
    - VCs push $20-50M cos into $100+M Public Cos by acquisitions if their natural potential turns out limited.
    - Angels perfectly happy with $20-50M companies as they cannot afford rounds for acquisitions.

    8. Board Seats and Control Issues.
    - VCs push for control in the A Round (2 of 4 seats plus a neutral and veto rights on selling etc).
    - Angels often happy with 1 seat an significantly lower percentage or convertible in the Angel Round.

    9. Different Time Allocation Priorities.
    - VCs focus far more time on winners since only 1 in 10-20 will make the fund and rest not that material.
    - Angels often give the most time to the squeekiest wheel (right or wrongly).

    10. How Much Each Values the Other.
    - VCs often aggressively cut angels out of deals they invest in.
    - Angels often encourage more moderate growth to avoid VCs unless short window seen.

    11. Exiting a Deal Gone VC.
    - Ways to get out early.
    - Ways to stay in the game.

    12. Conflicts in Style of Relationship with Founder.
    - Analogy: Parent vs Football Coach.

    13. Selecting companies that will avoid some or all of these situations.

    14: Not all angels have the same goals and may also conflict with each other: Types:
    - Operational Expertise Angel.
    - Guardian Angel.
    - Financial Return Angel.
    - Professional Entrepreneur Angel.

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