Angels Are Better For Startups Than VCs
That's because venture capitalists tend to underprice IPOs to benefit their own firms, according to the University of New Hampshire's Center for Venture Research, while the interests of angel investors are more closely aligned with entrepreneurs'. The center looked at all the companies that went public from 2001 to 2007 and figured out how they were funded -- whether their investors were angels, venture capitalists, both or none. Venture capitalists were prone to under-price IPOs (meaning the difference between the offering price and the closing price of shares was higher) because they hang on to their shares and distribute them to limited partners, said the center's director, Jeffrey Sohl.
16 October 2009•1 min read
