Fred Wilson offers a good answer to a frequently asked question with his AVC: Angel vs. VC? post earlier this week. This is great timing, too, because both angel investment and venture capital are in the midst of rapid readjustment to longer-term changes in the economy of startups and entrepreneurship.

He takes it as a two-part question:

The first is when you should SEEK angel vs. VC and the second is if you have the option of taking money from both what you should do.

Read his answer. Generally you want angel investment earlier in the business, and when it takes less money. But he makes some interesting exceptions.

This fits, by the way, very well with another of his recent posts, his post last Saturday recommending Venture Hacks’ AngelList Service. Very interesting: We get conflicting reports on the health of venture capital and angel investment these days, but more about decline than improvement. But this AngelList Service seems to be working.

What this shows is that the old model of angel deals is alive and well. Angels love to share deals with each other. It is how angel rounds come together. But AngelList adds at least two things to the mix. First, it adds a place where the deals can come together online. And second, it adds people to the mix that would not be part of the offline deal-sharing networks that already exist.

We have the great recession, venture capital investing is down, but it also costs less than it used to to get a web-based business going. Angels are still investing. And bigger investments are going to clean technology, alternative energy, bio technology and medicine. So business goes on. And so do startups.


Tim BerryTim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Follow him on Twitter @Timberry.