An angel investor friend recently got a bit of hard news – they were going to get significantly less on a recent acquisition of an angel investment than they had expected. It was a good lesson in the perils of angel investing.  Personally, I’ve made a couple dozen myself, so I have direct, sometimes painful experience.  The bottom-line (spoiler alert):  start-up investing is a LiFo scenario – Last money In, is the First money Out.  The newest investor gets to set the terms and will usually layer on preferences superior to the earlier money, angels being the earliest of all.  That means that except for common, angels are always at the bottom of the pyramid, and likely to be disproportionately penalized, relative to the preferred preferences sitting above.  Preferences they rarely get to have much, if any, say in.

from Forbes – Tech http://ift.tt/1sfZi44
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