WHAT’S THE DIFFERENCE BETWEEN AN ANGEL INVESTOR AND A VENTURE CAPITALIST?
Both angel investors and venture capitalists provide essential funding to businesses to help them succeed. They both offer investments in exchange for a stake in the business, including a degree of ownership and control, and both bring their own expertise to the table. But, this is where the similarities between angel investors and venture capitalists come to an end.
An angel investor will usually operate individually. They’ll invest their own money into the business rather than acting for third parties, and will often have a close relationship with the other partners in the business. They’ll offer a relatively modest sum of money (in business terms) and will have no problem in joining start-up companies to help them get off the ground.
They fill a much-needed gap between friends and family lending and venture capital financing. They’re far more suited to companies in the early stages of development, where their knowledge and experience can be essential to its success.
Venture capitalists, on the other hand, will rarely look twice at start-ups. They need to see a clear track record of success; something that businesses yet to begin trading clearly won’t have. They often act in networks or on behalf of other investors as well as themselves through venture capitalist firms, and while they too offer valuable funds to the business it’s on a much larger scale.
They have the capacity to invest a lot more money into a company, but they need to make sure it has the potential for huge returns. Ultimately, their aim is for the business to be sold off so they can reap their reward in a massive pay-off.
Both angel investors and venture capitalists can be hugely beneficial to any company. Which one you go for will depend on the level of financing required, the type of business you have and the long-term plan for the business as a whole. Whichever one you choose, you can be sure it will be a worthwhile decision.
About the Author:One of the best websites in this regard is entrepreneurinvestornetwork.com.au, which aims at uniting angel investors looking for business investments in Australia with budding entrepreneurs in the country.Log on to the website today. You will not be disappointed.
Article Source: ArticlesBase.com - WHAT’S THE DIFFERENCE BETWEEN AN ANGEL INVESTOR AND A VENTURE CAPITALIST?