| The main similarities between a venture capitalist and | | | | in high-growth industries, like technology or innovation. |
| an angel investor are that they both invest in | | | | Angel investors look businesses within their own area |
| businesses. They also take partial control of your | | | | of expertise. |
| business and are involved in some degree with the | | | | Obtaining Financing: Getting funds from a venture |
| running of your business. So how do you know which | | | | capitalist can be a lengthy process and requires |
| one is right for you? Here are some fundamental | | | | meeting strict criteria. Angel investorsare generally |
| differences that will help you decide. | | | | easier to find and negotiate with. |
| Funds Source – Venture capitalists pool their | | | | Long Term Cost: Both venture capitalists and angel |
| money from many different sources, both corporate | | | | investors will expect a return on their investment. |
| and private. Angel investors are successful | | | | Usually, the former will expect a higher rate of return. |
| entrepreneurs who work alone or in groups to invest | | | | It’s important that you be realistic in your goals. |
| their own money. | | | | If you are just starting your business, angel financing |
| Investment Amount – Venture capitalists usually | | | | may be your best bet. If your business is established |
| invest anywhere from $500,000 U.S. to $10 Million U.S. | | | | with a fairly good record, or it offers an exceptional |
| Angel Investors typically invest anywhere from | | | | opportunity, a venture capitalist may be for you. Do |
| $25,000 U.S. to $1 Million U.S. | | | | your homework, and research all of your options. |
| Development Stage: Venture capitalists normally | | | | Meet with several investors from both groups and |
| invest in companies that are well established and | | | | find out what each of their criteria are for funding. |
| already producing a profit. Angel investors look for | | | | Find out how much of a return they are expecting, |
| companies in the early stage of development. It may | | | | and how involved they want to be in the day to day |
| even be just at the idea stage. | | | | operations. Choose someone who you will feel |
| Industry Specific: Venture capitalists prefer to invest | | | | comfortable working with for the next several years. |