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Venture Capitalists & Angel Investors

Venture Capital is money invested by firms or companies that use other people's money. They raise that money by offering investors a chance to take part in a fund that is then used to buy shares in a private company. On the other hand Angel Investors are often successful business people who invest their personal funds into a potentially rewarding business opportunity. The following chart shows the differences in more detail.

	Venture Capitalists	Angel Investors
Typical Investment Amount	Over $200,000	$50,000 to $200,000
Source of Investment	Pension Funds and Investors to the VC Fund	Usually the Angel's own funds are invested
Investment Goals	Maximize return on investment and outperform other VC fund's returns	Social Responsibility, Community Involvement and Financial Return
Flexibility	Not Flexible	Can be Flexible at Times
Control Required	Might Need Control of Decisions through Board Positions	Usually Hands On as an Advisor
Investment Reason	More likely to invest in companies with investment track record and at least 50% profit margin potential	Funding provided before seeing success but potential for growth must be evident
Typical Duration	5-8 Years	2-7 Years
Investment Return Strategy	Conservative as Venture Capitalists prefers mature companies	Risky approach as Angels believe in early-stage investment (seed and start-up stages) since if they get involved with a company in its earliest stages more equity is available at a lower price
Preferred Industries	Limited industries Like High Technology	Various industries, including technology, pharmaceutical, publishing, insurance and finance
Strategy for Making a Presentation	A VC needs to know how much they can make in what timeframe.	An Angel needs to know how the business will be structured and run, what the exit strategy will be and how much profit the Angel can make
Experience and Background	Usually ten or more years investment experience and will do their own due diligence	Usually has been investing for at least five years and will provide the company some hands on guidance

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