Fremont: “We prefer Angel investors to stay with us as we enter the company and work with us to help grow the company. However, there are no hard and fast rules for this,” says Sameer Narula, Managing Partner, August Capital Partners. Angel investors play a very important role in the startups and it is their support and guidance to the entrepreneur which makes the difference between success and failure of a new venture.

An angel investor not only puts in his money during the founding years of a startup, but can be an invaluable resource and can help the entrepreneur to connect with the future rounds of financing, to build the executive team, and meet potential business partners.

Alok Mittal, Co-Founder, Indian Angel Network, and Managing Director, Canaan Partners, says, “From the point of view of the angel investors’ preference, sometimes they would like to stay invested and get further upside. In many cases they like to book profits.” Sometimes the signal of the angel investor is important and the VCs may want all their money to go towards building the company.

A study by the Harvard Business School shows that companies backed by angels enjoy performance gains of 30-40 percent, when compared to those startups which were not backed by angel investors. Also, these angel-backed firms are most likely to survive for atleast four years and be able to raise additional financing. Angel investors are also the driving force behind all the net new jobs in U.S. since 1980, according to a study by Kauffman.

Talking about the relation between angel investors and VCs, Shirish Deodhar, Co-Founder and CEO, Innovize Tech Software says, “We have both angels and the next round investors in the company. The relation between them is excellent. The angel investors were happy to get the investors in board, and the investors in turn wanted the angels to continue.”

According to Suvir Sujan, Co-Founder, Nexus Venture Partners says, "Angel investors should remain with the company post VC funding, unless the entrepreneurs request them to sell to allow VCs to get more ownership without diluting the entrepreneurs.”

Many angels believe that once larger capital is raised, it is the responsibility of the investors to lend more support to the company. The VCs and Angels both have the same motive—to see the company grow—thus if the Angels have a clearly set out plan, it would not be tough for them to leave the company. However, it is the personal decision by the Angels; they should not be forced out of the company just because VCs stepped in.