Are you a startup looking for some funding? Whether or not you’re starting out, capital is very crucial to push a business further. Capital can be gained in the form of angel investing or venture capital with the choice being in your hands. So what is the difference between the two? Let’s look at some factors to distinguish them.
While both these categories constitute people who invest in business, there is a key difference that helps in distinguishing them. An angel investor is apparently someone accredited who has the money value to spend as much as he or she wants. The angel investor’s net worth should be above $1 million. Usually these individuals own their own businesses and can be gained via family or friend connections.
A Venture Capitalist on the other hand can be an individual or firm that likes to invest in small companies to give them the ideal push. The money used in investing isn’t their own.
For businesses that are already established, venture capitalists seek them out in order to not lose any funding in case the business goes downhill. On the other hand, Angel Investors push startups further after judging the scope of the same. The risk factor is more in the latter, but they find it worth taking.
Usually, Venture Capitalists are known to spend more than Angel Investors. The average deal made by venture capitalists is $11.7 million. In comparison, the average angel investment according to the SBA is $330,000.
In either case, both investors act like mentors who you can pitch your business ideas in order to decide what fate has in store for you. If luck has it, you will be able to spread your wings and establish your flight in no time.