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| About Paul Kedrosky |
| Dr. Kedrosky is currently the Executive Director of the William J. von Liebig Center in San Diego, California. Using an innovative seed capital program, the Center catalyzes the commercialization of technologies from the internationally-ranked University of California, San Diego. Dr. Kedrosky is also a venture investor with Ventures West, Canada's largest institutional venture capital firm, where he is most active in consumer technologies and software. He is currently on the board of Marqui Corporation, a marketing automation software company. |
Recent Article:
Angels? Sure. VCs? Sure. But Not Both.
- For more on Paul Kedrosky visit paul.kedrosky.com
This paper's result makes me think we need to augment the martini model of venture investing with a martini and olive model:
We examine the impact of business angels on 182 Series A financings and subsequent company outcomes. Our studied rounds have a varied mix of business angel and formal venture capital investors (VCs). We find that when only angels participate in a financing round and VCs are absent, control rights are more entrepreneur-friendly, legal expenses are lower, and investors are more geographically proximate to the company. Such angel-backed companies are less likely to fail and are more likely to have a successful liquidity event. We find that companies financed exclusively by VC investors also perform well, particularly when deals are large. Companies financed by both angels and VCs experience inferior outcomes. Our results suggest that entrepreneurs consider business angels to be preferred investors and VCs investing in small deals face adverse selection. For larger deals, where deeper-pocket VC participation is required, these roles reverse and angels face adverse selection when investing alongside powerful VC syndicates. [Emphasis mine]
Angels Sure VCs Sure But Not Both - To learn more about this author, visit Paul Kedrosky's Website.
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