THE KEY DIFFERENCES BETWEEN VENTURE CAPITAL

& ANGEL INVESTMENT

While both Angel Investors and Venture Capital Firms provide investment, there are pros and cons to using

each based upon the stage, operational objectives, and long-term goals of the business.

To help determine which outlet is best for your business, below, we have put together the key differences in each

investment vehicle.

DEFINITIONSANGEL INVESTOR: An investor providing financial

backing to small startups / entrepreneurs.

VENTURE CAPITAL: Financing provided by a group of

investors to small firms with perceived long-term growth

potential.

Angel Investors• $24 Billion invested last year

• Companies raised an average of $328,000 from angel investment

• In the past two years, there were 300,000 Angel Investor transactions

• There are four million Angel Investors, worldwide, with a net worth of $1M plus

Venture Capital• $48 Billion invested last year

• 11,686 companies were funded between 1991 & 2000; 33% were acquired and 14% went public

• Last year, of all Venture Capital Funds, 32% were for early stage companies, and 2% at the seed stage

Investor Statistics

Angel Investors• Comfortable investing

smaller sums ($50,000)

• Quick investment decisions (1-2 Meetings)

• No control of subsequent funding rounds

• Relatively simple terms for investment

Venture Capital• Lengthy Diligence Process-

Complex process to evaluate investment decision

• Typically investing large sums into businesses (on average $2M+)

• Board Seat- VCs will typically want a board seat as part of their investment

Investor Characteristics

INVESTMENT AMOUNT• Angel investment can vary, but

is typically smaller and for early-stage & small ventures

• Venture Capitalists generally invest a minimum of $2M

• Venture capitalists have more assets as they are typically parts of large funds , whereas angel investors can be individual savvy investors

INVESTMENT STAGE• Both angels and ventures

can invest at any round of financing

• Venture capital is best suited to lead financing rounds with additional investment from Angels, or act as an investor in angel rounds.

PROFESSIONALISM Venture Capitalists have an

arduous process to evaluate deals professionally, and are

professional investors

Angel Investors may be professional investors, or

may be business owners and professionals in another field who want to invest some of

their savings

INVESTMENT SOURCESVenture Capitalists are fund

managers, with money invested from Pensions, Corporations, and

wealthy individuals / families

Angel Investors typically have saved and earned their

investment dollars on their own, meaning their investment may be more of a personal decision than

financial, supporting local community / charity

VCs typically want a board seat in exchange for investment.

Angels may also want to be involved if they can be a direct

asset to the company

Angels are typically less likely to become board members than

Venture Capitalists

BOARD SEATS

KEY DIFFERENCES BETWEEN ANGELS &

VCs Investment Amount

Time Investment Professionalism Money Invested

Board Seats

NEED HELP WITH RAISING FUNDS FROM

VCS OR ANGEL INVESTORS?