Question

discusses the role that venture capital and angel investors play in providing capital for entrepreneurial ventures. Discuss the ways in which these sources of entrepreneurial capital are similar and how they are different, and discuss the importance of venture capital to a healthy economy. Most large cities have venture capital firms, and most metro areas have networks of angel investors; research and identify these for your geographical area and share some information about them.

Answer 1

Venture capital and Angel investors play an important role in providing capital for entrepreneur adventures who are generally startup entrepreneurs and they will be provided with a higher amount of equity capital by venture capitalist and Angel investors.

Differences between Angel investors and venture capitalist are that Angel investors will be offering with their own money whereas venture capitalist are taking money from different sources in order to invest into the startup businesses. Geographical proximities will be highly important while Angel investing whereas geographical proximity is not important in venture capitalist investing. Exit route is more important in venture capitalists whereas angel investors are having less importance on exit.

Similarities related to Angel investors and venture capitalist are related to that both are providing general equity funding and they will be trying to look for influencing the management and they will also be taking higher risk in order to maximize their rate of return.

Venture capital is highly important for a healthy economy because it will be providing a platform for the budding entrepreneurs in order to maximize the rate of return by having access to the capital and they will also offer them risk-taking capabilities and specialised facilities so that they can maximize their rate of return

Angel investors are generally preferring for the geographical proximity then they will be trying to go for investment into such shares which are offering with larger benefits and they being unknown Firms so they will be trying to look for a smaller firms whereas venture capitalist are generally investing in larger cities which are having known names.