This sponsored post is produced by Klipfolio.

Every startup needs capital — money it can use to either get off the ground or ramp up growth. Knowing when to seek outside investment from venture capitalists can be a big decision for startups.

Unfortunately, too many startups don’t know enough about how the VC investor system works. Here are six things I think every startup entrepreneur should know about venture capitalists.

1. Understand what a VC is, and how a VC is different from an angel investor

In its early days, if a startup raises any money, it’s from people who know the entrepreneurs personally. These people — friends and family — will be happy to get a return on their investment eventually. But chances are, they are not investing solely to make a profit. The money they provide is what I call “love money.”

Moving up a notch, angels and VCs want a return on their investment.

Angel investors — most often past entrepreneurs themselves —