Welcome to another Bizzbucket article.
In this article I will be talking about venture capitalists and angel investors, and what are the major differences between them and to whom you should approach for the fundraising process. So guys without wasting any time, let’s get started.
Angel Investors are basically an individual who invest their own personal money into early-stage startups. They are the people who have a lot of disposable income that’s why they want to invest in startups. Angel Investors’ investment majorly lies below than $1 million (~seven crores in Indian rupees).
And VCs or venture capitalists are basically a kind of company, not an individual, which invest collective rich people money into startups, majorly into the later stage startups and their investment lies above $1 million
For angel investors, all kinds of analysis and due diligence before investing in startups is done by angel investor themself. But in VC funds, VCs fund managers who do all kinds of due diligence and startup analysis for the VC funds.
Many times angel investors come together to form a group to fund startups, some kind of example is like Delhi Angel groups and Mumbai Angel groups. And for VC one Some examples are like Sequoia Capital, lightspeed ventures, and many more.
Also, one major difference to notice that angel investors look for high stakes in the startup as they invest very early on in the startup, but that’s not the case with the venture capital firms.
So, whatever the investment is VCs and angel investors made into startups, they get their returns by selling their stakes, which majorly happened by two exit strategies. One is IPO and second is the acquisition of this startup by some big company.
One more important thing to note that fundraising should start one year before the runway getting over, because fundraising process is brutal as take a lot of sell to raise money.
So, guys, there’s a major difference between angel investors and venture capitalists. Hope you guys like it.
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