Which of the two (angel investment and venture capital) can give startups a bigger chance of succeeding?

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JASON LEMKIN

The bottom line, is 95/100, the best type of investor is the one that can most help you raise the next round — that you also trust. (But trust comes first).

Yes, it would be great if your investors “add value”, and are great mentors, and are cheerleaders, and can help you recruit, and even, can help get you early customers.

But you can do that all yourself, if you have to.

What the best investors for each stage do is also bring you direct access to the best next round investors. This is harder to get until the later stages.

Of my 23 investments, 22 have raised an “up” round from a strong next-stage VC firm. And a number of the top VC firms are LPs in my fund.

Now of course, intros and such aren’t enough alone. If you don’t hit the milestones, the metrics, you can’t raise another round.

But the top VCs all want to follow the top VCs from the prior stage. It’s the best social proof, the best due diligence, the easiest way to invest in great companies. I.e., the best Series B VCs want to follow the best investments the best Series A VCs have invested in. The best Series A investors want to follow the best Series Seed ones, and so on. This is why YC is so powerful at the accelerator stage. Even if YC does nothing else, it gives you a huge boost for the next round — if you do well at YC. I want to meet every YC SaaS company that is doing well. Every one.

All things being remotely equal, pick an investor first that you trust, and second, that can deliver you investors for the next round — assuming you deliver the goods and progress to support it.

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Published on March 14, 2017
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