Angels and venture capitalists: Substitutes or complements?

We analyze the funding of start-up companies across financing rounds, focusing on dynamic interactions between angel investors and venture capitalists. Using unique data from British Columbia, Canada, we show that angels capitalists are substitutes. This substitutes pattern applies performance range companies. It is less pronounced for serial angels. An instrumental variable analysis, based available investor tax credits, suggests driven by company characteristics. Overall, evidence points to existence parallel streams capital funding, with fewer transitions than traditionally assumed.