The time evolution of the isotropic-nematic phase separation in dispersions of sterically stabilized colloidal rods was studied with polarization microscopy and static small angle light scattering (SALS). The rods aspect ratio is 14. In the biphasic region (between the isotropic-nematic transition volume fraction phi(I) =12.1% and the nematic-melting volume fraction phi(N) = 35.1%) a SALS ring develops at a wavevector K-max which shifts to smaller K values in time. Increasing the concentration from phi(I) to phi(N), polarization microscopy indicates a crossover from nucleation-and-growth to spinodal decomposition. Nucleation is accompanied by a decrease of the intensity at large K as similar to K-4, which is typically found when sharp interfaces have developed in the system. For spinodal decomposition a much less pronounced decrease is observed within the experimental time window. The rate of phase separation was studied by monitoring both the change of the turbidity and the shift of K-max in time. A maximum rate is found just within the spinodal region.