To VC or not to VC ?

The rule of thumb that I've heard before is that VC funding tends to kick in at between $500,000 and $1,000,000. If you're looking for less, then angel investors might be a better option. Also, it depends on what stage your business is at. A lot of VC firms (even the guys who invest at the lower end of the scale) like to see at least some level of traction before they will consider investing. Sure, they will all say they fund at the PowerPoint stage, but that only really happens if you have a serious track record and one or two significant exits in the past.

Also, be wary of VCs. I have met a lot, and while many are nice, a lot of others have little or no entrepreneurial experience. They haven't set up companies, and haven't had to deal with the highs and lows associated with doing that. They can also be keen to put their own stamp on the company by introducing one of their people in a C-level position.

My advice would be to sign up for thefunded.com - see what people say there. It's a good barometer and is often brutally honest. Also, as Khaled said, look at portfolios - what sort of companies do they fund? What stage do they come in at? Are they active in your area generally? Try to talk to founders who've been funded by these guys, but be aware that they might not really be able to tell you the whole truth! Also look at what sort of value they can add (if any). Do they work with any companies that you could partner with? Can they bring customers to the table for you? All of these things are important, as VCs are corporations that exist to make money, not to be your friend - which is what an angel can be. The VC guys will not hesitate to squeeze every last bit of value out of any deal - whether that be in terms of preference shares, liquidity preferences or other clauses in the contract.

My advice would be to stick with angels. If you have access to high net worth individuals, then try to work with them and have the VC route open as plan B.

First you have to check VC's portfolio, it's success stories, then you should ask people who are getting fund from this VC to see if it's a troublemaker or not.

Second you have to put in your mind that usually the average VCs deal sizes are bigger than Angel Investors. so if your project requires fund under $500k, Angel Investor is a good choice (note that there exist Angel Investors who invest millions in one project but usually they invest something around half million or less).

I agree with eamonn. Take care that investment is used to bring in more opportunities, not to increase your valuation. If your angel investment did you good, and you see an opportunity for expansion and you need the money, then move to VC. Anyways VCs will not give you the money if they did not see the opportunity, and on the other hand if you have an opportunity that you can not see, you will find VCs coming to you and offering help in showing you the opportunity and realizing it. In all ways it is your call, but do it smart and have a lawyer to cover your back.

My answer depends on your company/idea industry ... if you are talking about IT industry, I won't go with the VC option unless my idea requires one of the following: 1) High cost Marketing Plan 2) Physical presence in more than one location 3) Expensive R&D operations

All other involvements may be solved without VC.

I suppose it depends on the type of business you are running

I always considered VC as last option, but if you have a great idea with high market and profit potential, you can consider VC as it will give you your business credibility in the beginning.