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Difference Between Venture Capitalist and Angel Investor

In: Other Topics

Submitted By gsimeni
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Pages 7
NAME:
SIMENI ENEYI GABRIEL
DEPT:
ECONOMICS
TOPIC:
DIFFERENCE BETWEEN VENTURE CAPITALISTS
AND ANGEL INVESTORS
EMAIL:
gabrielsimeni@gmail.com

DIFFERENCE BETWEEN VENTURE CAPITALISTS AND ANGEL INVESTORS
Both are affluent individuals who provide capital for a business start-up, usually in exchange for convertible debt or ownership equity. However, they differ from Friends and Family who will typically invest very early when all one has is an idea. The prevailing challenge is people would rather invest in the company rather than the individual.
In this regard, it is okay to say that Angel Investors look for same things as Venture Capitalists, but their differences play a hard role in shaping the financial strategies and the future of the business.
Venture Capitalists are one way to raise serious amount of capital but as you may imagine there are pitfalls. The final vote on ‘the right of sale’ will also most probably be a mandatory right for them. Since Venture Capitalists main motivation is “Return on Investment as Soon as Possible” they always have an almost manic desire to take over every entrepreneur as quickly as possible and they care less where that return comes from as long as they are able to receive a massive bonus for the risk and skill that they have invested.
More appealing to an entrepreneur starting-up is to seek out a business angel investor that is interested in the line of work you are involved in, as they will either take an equity position and some level of debt (or typically a combination of the two) in exchange for their investment. They will also take a seat on your board of directors, which they will in turn use as a platform to monitor their investment and to provide invaluable advice and mentoring. Sometimes they can actually take an active role in the organization and get it kick started into high gear which is

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