To start a business need the money and that’s why Startup business trying to raise fund from Angel investors and venture capital. because banks will not give money to start a business as starting a business can fail and money will not be recovered from the business.in this case, Entrepreneurs looking for investors. In this article, we will learn about what is an angel investor, venture capital & venture capitalist.
What is an angel investor?
Initially need money to start a business for that Startup entrepreneur approach those investors who would like to invest to start a business that investor is known as an angel investor.
Angel investor is an individual high net worth investors, or have a family office for investing. funding Start a business is a too risky investment. even it’s riskier than startup business which is running. that’s why venture capitalists don’t want to invest to start a business.
Angel investors take too much risk that is why they always too demand more percentage of stakes.
As funding to start a business is risky then why angel investors do this type of investment? because of too much return starting a business has capabilities to give the best returns . as angel investors took a high risk, So reward ratio is also great.
What is Venture capital(VC)?
Financial institutions, investment banks, high wealth investors invest in startup companies to see the future potential growth of the companies. this invested capital is called venture capital(VC). Venture capital refers to investing in startup companies to see Future growth potential of the company. investors of the venture capital(VC) called venture capitalists.
Venture capitalists generally invest in startup companies for the expansion of the company.
Venture capitalists buy the stake of the company with this venture capitalists get the power to take the decision of the company.
Investing in startup companies are too much Risky because not all startup company can be successful and get profit. But as per risk-reward ratio its good. startup companies have too much potential to give outstanding returns to investors. that’s why Venture capitalists invest in startups.
Difference between Angel investor and venture capital
- For the initial business, the angel investors are ready to invest in the company.
- the investor takes too much risk. that’s why mostly demand for more share.
- if the business is going well, then hug return will get.
- Generally invest in the established business.
- because of invest in an established business that why risk is low compared to angel investors.
- if the business is going well, then the high return will get.
Angel investors provide funds to start a business & venture capitalists invest in startup companies for expansion.
Angel investor takes too much risk than venture capitalists. Angel investor demand for more stakes compares to venture capital.
Angel investors are individual and venture capitalist is private firms.
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