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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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