Angel investors invest mostly as individuals, while venture capitalists are structured companies comprising of several individual investors.
Angel investors invest their own money into businesses, but venture capitalists invest money contributed by several investors.
Because they are individuals, angel investors are usually unable or unwilling to fund businesses that require huge funds. Venture capitalists, on the other hand can fund businesses that require millions of dollars, since they are holding funds from several individuals.
Angel investors may be willing to “hands-off” your business if they have nothing relevant, aside the capital to contribute. But venture capitalists will always require board seats and complex deal terms including the ability to control subsequent financings.
Angel investors tend to believe in the entrepreneur and invest in them as a person. Venture capitalists, being less emotional and more process involved, mainly evaluate deals and make offers.
An angel investor fund businesses for motives beyond financial gains (such as social responsibility and community involvement). A venture capitalist is obligated to maximize investors’ returns and outperform other venture capitalists; in order to attract even more investors.
Angels tend to avoid follow-up investments out of fear of losing more money if the business fails. Venture capitalists, on the other hand, usually invest additional funds at later stages to assist with growth.
Angel investors are found in virtually all industries, and they have diversified portfolios. Venture capitalists are involved in limited industries (mostly technology and infrastructure), and they have limited portfolios.
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