I will support the questionnaire with interviews with business angels, venture capitalists, business angel networks and companies who have had both venture capital and business angel funding.
Business angels typically invest much smaller amounts than it is feasible for venture capitalists to invest in. They also invest at very early stage in the business. Despite this difference in the type and level of funding, venture capitalists view business angels as rivals. Business angels often lack the resources to make follow-on investments and therefore face heavy dilution of their equity and subsequent fail to capture the very high returns. This creates a real source of tension between the two investors.
I intend to examine the affect of the transition between business angel and venture capital finance on all three parties involved (ie including the company).