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Raising Money – Venture Capital vs Angel Investment

Raising Money – Venture Capital vs Angel Investment
21 Feb
10:20

When I was in my college days studying management education, I used to think that Angel Investors and Venture Capitalists are two different bit of jargon thrown at you at different times to mean the same thing. Now that I am a management graduate, I understand that I was naïve to think that as there are certain fundamental differences which I am about to explain in the passage below.

I am going to break it down to you with the help of the following 2 simple examples:

Angels Investment

Let’s say that your rich friend agrees to loan you an amount to help you get yourself a business up and running and you promise them that you will not only return them the amount back but you will pay them something more as a reward of their trust over you. If it fails then your friend loses money just as you lose your business. That the concept here.

1. Individual high net worth investors with personal net worth more than $ 1 million

2. They will generally put in their money when the idea has been converted to at least prototype or is in a beta phase

3. They generally agree to finance anywhere between $25,000 to $100,000

4. The due diligence done by angel investors can range from a basic background check to thorough research

5. They have higher risk as compared to VCs as there is a higher chance that the project may fail.

6. They look for an exit option from 3 to 5 years of course after to get returns on their investments

Venture Capital

Here you get to use a sum of money which is lent to a company by a group of people who’re promised that their money will be utilized in an opportunity which will get them a great reward. I just hope you don’t disappoint them.

1. They generally com into the picture after the stage Angel Investors invest their money.

2. A VC invests on an average $7 million in a company.

3. When they come in a company is already up and running and they are brought in to finance a particular big project or to get a company through a fast paced growth. Until a company decides to go public.

4. The due diligence carried out is generally much intense and probably you guessed that from the huge sum of capital they bring in.

Venture Capital vs Angel Investment

5. Their investment stays valid until ten years after which their principle with returns must go back to them.view their comments at http://worthplaying.com/article/2016/2/11/news/98435/

When you do choose to approach investors and if by some supernatural occurrence if they consent to back you, then it will be pivotal on your part to search out the best legitimate exhortation that you can manage the cost of for the resulting transactions. One sentence or even an expression inside of the beginning contract can decide your prosperity or disappointment. VCs are experts, and you will need to wind up one preceding playing in their association.

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