Invest Wisely: Know the Difference Between Angel Investors & VCs

• Angel investors and venture capitalists are two types of private investors who provide funding for early-stage and growth-stage companies.
• Angel investors are seed-stage financiers who offer mentorship to nascent businesses for equity, while venture capitalists inject substantial capital into later-stage firms.
• There are some key differences between angel investors and venture capitalists that include the size of investment, the level of involvement in the company, and the type of returns they expect.

Overview

Angel investors and venture capitalists provide funding for early-stage and growth-stage companies. Angel investors typically invest their own funds in exchange for equity in a business, while venture capitalists are part of a professional investment firm or fund which makes larger investments with higher expectations for returns.

Who Are Angel Investors?

Angel investors are high net-worth individuals who invest in companies at an early stage in exchange for equity in the business. They frequently provide advice and mentorship to the businesses they support, as well as their own funds. Notable angel investors in the crypto world include Roger Ver, Barry Silbert, Naval Ravikant, and Charlie Lee.

Who Are Venture Capitalists?

Venture capitalists (VCs) are private investors who fund startups or early stage businesses with significant room for growth with significant capital investments expecting a return on investment when the company goes public or is acquired. Well known VC firms include Andreessen Horowitz, Blockchain Capital, Coinbase Ventures, Digital Currency Group, Polychain Capital and Pantera Capital.

Differences Between Angel Investors & Venture Capitalists

The main differences between angel investors and venture capitalists is the size of their investments; angel investor typically make smaller contributions than VCs do and take a more active approach to investing by offering advice and mentoring to fledgling businesses whereas VC’s may have less influence over day to day operations but provide more capital upfront. Additionally, angel investor returns depend largely on future success whereas VCs receive equity from their investments so if a company succeeds they can benefit from selling their share of it at a higher price than what they originally bought it for.

Conclusion

Both angel investors and venture capitalists present great opportunities for companies looking to raise money quickly but there are several key differences between them that should be taken into account before deciding which type of investor is right for you.