Who is an Angel investor?
Angel investors have several backgrounds, though the business sector is frequently where they first started. Typically, angel investors work in the following fields:
- Professionals in the business world, including attorneys, physicians, accountants, and financial planners.
- C-level corporate executives who have advanced via the ranks and are knowledgeable of what is required to manage a profitable firm.
- Entrepreneurs and successful owners of small enterprises who have already started profitable businesses and can identify startups with promising futures.
Who is a Venture Capitalist?
A venture capitalist (VC) is an investor in private equity who lends money to companies with strong development potential in exchange for a stake in the company. A venture capital investment could include backing startup projects or assisting small businesses that want to grow but lack access to equity markets.
Venture capital firms are organised as limited partnerships (LPs), with the partners investing in the VC fund. Investment choices are typically made by a committee. Once potential businesses have been discovered, the aggregated investor capital is committed to sponsor these companies in exchange for a significant equity interest.
Difference between Angel Investors and Venture Capitalists
|
Basis |
Angel Investors |
Venture Capitalists |
|---|---|---|
|
Phase of Investment |
Angel investors commonly offer seed capital to entrepreneurs by investing in early-stage companies. |
Venture capitalists, on the other hand, frequently invest in later-stage enterprises that have already showed significant growth potential. |
|
Level of Involvement |
Angel investors usually take a hands-off approach and are not involved in the day to day operations of the company. |
Venture capitalists frequently offer strategic and operational help to the management of the enterprises in which they invest. |
|
Source |
Angel investors are high-net-worth individuals that invest their own money. |
Venture capitalists manage capital for wealthy people or larger investors and invest it. |
|
Investment Standards |
Angel investors’ investment requirements may be more flexible in terms. |
Venture capitalists’ criteria are more severe and require companies to reach particular milestones and benchmarks. |
|
Diversification |
Angel investors typically have a more diversified portfolio. |
Venture capitalists hold a concentrated portfolio aimed at a particular industry or sector. |