A Comparison Between Angel Investors and Venture Capitalist
Any new business regardless of the industry will need capital. Capital is indeed required to start a business but if you don’t have the money where or how do you raise it. The obvious way you can fund your business is through investment loans. On the contrary, things like a low credit score can hinder you from getting an investment loan. The other best way you can still fund your business when you cannot get a loan is through angel investors and venture capitalists. Between angel investors and venture capitalist you must choose the best that suits your business. The following content will guide you to make the right decision.
The term angel investor is self-explanatory because just like the name suggests; an angel investor is a guardian angel for your expanding business. An angel investor will put out the necessary about for building a business from scratch or expanding a business. By investing in your business, they will mostly want twenty-five percent to sixty percent return on their investments. There are different types of angel investors. Examples of angel investor types are; groups, wealthy people, crowdfunding, and sometimes family friends.
An angel investor will bring your business a lot of benefits. An angel investor will not only fund your business but be more involved in your growth process of the business than a bank would be and more importantly the don’t expect you to return the capital when the business fail, discover more about this company. In addition, an angel investor has a better understanding of the industry and will only look towards long term struggles.
Just like an angel investor, a venture capitalist will give out their money to expand your business and ask for equity within your company, view here for more. Nevertheless, unlike an angel investor, a venture capitalist will expect an approximately tenfold return after seven years. A venture capitalist will choose to take a big risk but get the highest reward, view here. They, therefore, invest big in industries and products that has the potential to grow rapidly. Also a venture capitalist is not the same as an angel investor in the sense that you will not find an individual venture capitalist as they always congregate to form a venture capitalist firm. A venture capitalist firm also has a group of analyst that will choose the business to invest in.
Your business will also benefit from a venture capitalist. A venture capitalist may not know the industry quite well but they are business gurus and thus will offer the best guidance. In conclusion, the article above will help you make a decision between choosing a venture capitalist or an angel investor.