Angel Investor vs Venture Capital

Difference Between Angel Investor vs Venture Capital

In the case of small business or startups funding is the primary aspect and due to which the business can progress and take the shape of a Business group. The seed financing or the primary capital is always required which can transform the Entrepreneur’s idea into reality. Thus, the seed funding is an absolute necessity and required which would provide thrust to any business. The primary stage of  Business is almost nascent and generation of revenue seems to be nil. The basic Research & Development period or the product manufacturing or the business set up period is an inherent part of a business and is known as break-even. The break-even part can also be classified into few stages which indicate the viability of the business and indicates if it would likely to sustain or not?

Thus, at the seed funding stage, the Business requires assurance of capital and most of the times the Banks do not provide loans to a new generation of ideas. So it’s always not possible to gather funds until and unless a group or individual investors steps in the scenario. Those classes of investors could be classified as Angel Investor vs Venture Capital investors. The types of business are generally new to the economy and bear some amount of systematic risk within it.

Angel Investors deals with one man, who invests from its personal finances and has a positive belief in the idea of the Business. An Angel investor does funding for the startups which has huge potential in Future. Thus they are High Net worth influential individuals who have the ability to contribute something innovative to the society and can bear the risk of failure. These individuals are directly or indirectly involved with the business in lieu of the substantial amount of stake in the company.

On the other hand, Venture capital follows the same concept but the capital is contributed by a group or partners who are professional investors. Primarily they are a group of businessman and are funded by a group of investors, corporate funds, and pension funds. They are also known as Limited Liability Partners. They associate with the company from its primitive stage and are responsible to mentor the course of business. They connect the dots and supply the required resources and they watch if the business is occurring in a healthy and systematic manner or not. The primary concern is that the Business idea has to be executed in a manner which should fulfill all the regulations of business.

Angel investors may or may not involve in each and every aspect of the Business. Primarily the Angel investor provides financial and Contacts only, he might not provide the technical support. Thus the level of involvement is limited to the sweet will of both the parties. Whereas the Venture capital, once they are convinced with the idea and the product, provides all the resources right form marketing to the product development or the Human Resource support to the team who are conducting the Business.

The involvement of Angel investors deals with early-stage funding, the late stage technology development, and the early market product launch. But the Venture capitalists invest in an early-stage business, more developed companies in respect to product and technology as per the motive of the venture capital firm.

Angel Investor vs Venture Capital Infographics

Below is the Top 5 difference between Angel Investor vs Venture Capital

Key Differences between Angel Investor vs Venture Capital

Both Angel Investor vs Venture Capital are popular choices in the market; let us discuss some of the major Difference Between Angel Investor vs Venture Capital:

1. The primary difference between Angel Investor vs Venture Capital is the number of people associated with the business. In the case of Angel Investor, there is only one person whereas the angel investor deals with an entire group who are experts in executing new business.
2. Responsibility and due diligence are limited for Angel Investor, unlike Venture capital.
3. The risk associated with the Business funded by Angel investors is generally high in comparison to Venture capital.

Head To Head Comparison between Angel Investor vs Venture Capital:

The primary comparisons between Angel Investor vs Venture Capital are discussed below

Angel Investor vs Venture Capital – Final Thoughts

Both Angel Investor vs Venture Capital is equally necessary in case of new business opportunities due to the lack of funding done by a Bank or other financial institutions. In most of the cases, the banks or financial institutions do not pay any heed in case of new generation business. Thus, the evolution of new generation businesses is possible by means of Angel Investor vs Venture Capital.

Recommended Article

This has a been a guide to the top differences between Angel Investor vs Venture Capital. Here we also discuss the Angel Investor vs Venture Capital key differences with infographics, and comparison table. You may also have a look at the following articles –

1. Private equity vs Venture capital – Differences 
2. Dividends vs Capital Gains Which is Better?
3. Nominal GDP vs Real GDP
4. Revenue vs Income
5. Finance vs Economics: What are the Amazing benefits
6. Amazing differences between GDP and GNP