Question

What is the difference between an angel investor and a venture capitalist? What event do these investors want to see happen? Why?

Answer 1

ANS:

1.Angel investors, are individuals who invest their personal finances in a start-up. Angels are rich, often influential individuals who choose to invest in high- potential companies in exchange for an equity stake.

Venture capital firms,on the other hand, comprise a group of professional investors. Their capital will come from individuals, corporations, pension funds and foundations. These investors are known as limited partners .

2. Angel investors invest between $25000 and $100000 of their money, though sometimes they invest more or less . When angels come together in a group, they might average more than $750000

Venture capitalists, on the other hand, invest an average of $7 million in a company.

3. Angel investors specialise in warm-upstate business, funding the late-satge technical development and early market entry. The funds an angel investor provides can make all the difference when it comes to getting a company up and running.

Venture capitalists, on the other hand, invest in early-stage companies and more developed companies, depending on the focus of the venture capital firm. If a start-up shows compelling promise and a lot of growth potential, a venture capitalist will be keen to invest.

Angel Investor:

Angel investors involves a high degree of risk, so angel investor have the expectation of doing more than just getting their money back when they invest in an enterprise.

Essential an angel investor is investing in people. So he or she needs to see the evidence that the business is in hand of people who are knowledgeable, experienced, competent and trustworthy - and possess the skills to lead the business to the next level.

Also, they want to see a business plan that's both convincing and complete.They want to see that the company have developed a vision and given thought to details of how to get there like financial projections, detailed marketing plans etc.

Venture capitalists:

The first requirement is a strong management team, with relevant experience, drive, self-confidence and experience.

The next requirement is whether the company is targeting a substantial and rapidly growing market.

They want to see significant gross profit margins .Whether company has sound strategy and business plan.