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A Comparison Between Angel Investors and Venture Capitalist
If you are starring any business you 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. One of the main ways you can fund your business is by taking investment loans. On the contrary, things like a low credit score can hinder you from getting an investment loan. If you cannot get an investment loan, you can benefit from angel investors and venture capitalists. Depending on your industry you must choose either angel investors or venture capitalists. By reading the following paragraphs you will get clarity and make an informed choice.
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. Note that there are many types of angel investors out there. Examples of angel investor types are; groups, wealthy people, crowdfunding, and sometimes family friends.
You will have a lot of advantages just by an angel investor funding your business. 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.
A venture capitalist also invests their money toward expanding business in exchange for equity within the company. Nevertheless, unlike an angel investor, a venture capitalist will expect an approximately tenfold return after seven years. The main basis they work of high risk but high reward. They, therefore, invest big in industries and products that has the potential to grow rapidly. Another difference between a venture capitalist and an angel investor is that venture capitalist are not always solo but come together 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 summation, above are some of the comparison points between venture capitalists and angel investors.