What is the Difference Between Venture Capitalist and Angel Investor?

The primary difference between a venture capitalist and an angel investor is the source of the invested money: venture capitalists invest money controlled by a venture capital fund or firm, while angel investors invest their own money. Here are some key differences between the two:

1. Investment Source: Venture capitalists invest money on behalf of a risk capital company, using funds from corporations, pension funds, hedge funds, foundations, or institutions, and wealthy individuals. Angel investors, on the other hand, invest their own personal funds.
2. Investment Amount: Venture capitalists typically invest larger amounts, often starting at a minimum of $1 million. Angel investors, due to their personal investments, usually invest smaller amounts, typically ranging from $25,000 to $100,000.
3. Involvement in the Business: Venture capitalists often expect a high level of involvement in the business's decision-making process, sometimes even demanding a seat on the board of directors. Angel investors, while they may have industry experience or contacts, generally do not want to have direct involvement in the running of the business.
4. Investment Stage: Angel investors usually invest during the early stages of a startup, providing seed funding to help the business get off the ground. Venture capitalists typically invest in companies with some signs of future growth and potential, focusing on businesses that have already proven their business model.
5. Length of Investment: Venture capitalists tend to be invested for a longer period than angel investors, as they often provide further funding rounds to help the company scale. Angel investors usually have a shorter investment period, typically lasting between two and five years before exiting.

In summary, venture capitalists invest larger amounts of money and typically have a more hands-on approach, while angel investors invest smaller amounts and prefer not to have direct involvement in the businesses they support.

Comparative Table: Venture Capitalist vs Angel Investor

Here is a table comparing the differences between venture capitalists and angel investors:

In summary, venture capitalists typically invest larger amounts of money and prefer to work with companies that have demonstrated growth potential, while angel investors invest their own money and focus on early-stage startups. Venture capitalists often take a more hands-on role in the companies they invest in, while angel investors may choose to be less involved in the daily operations of the business.