Angel Investors and Venture Capitalists: A Complete Picture

Many young start-up entrepreneurs looking for capital have not heard of angel investors. Angel investors are wealthy individuals who inject money or capital into your business venture, usually to start a business. Of course, you can approach angel investors even if you’re a seasoned businessman, in which case, you’ve probably heard of them. Angel investors inject capital in exchange for ownership shares or even convertible debt.

a brief review

When an angel investor invests in your company, they become part of your company and not just another person who owns shares. The progress of his company becomes important to him because his money goes into making the company what it is. Angel investors don’t really have much control over your company. Also, the interest rates they charge are also not too high. What’s more, they don’t mind a slower return on their investment, compared to, say, venture capital firms.

What are venture capital firms? This is another reliable source of financing for businesses just starting out. But there is a condition; companies should approach venture capital firms only if they are confident in their ability to produce a really high growth rate. Entrepreneurs should definitely not apply the “once bitten, twice shy” policy when approaching venture capitalists.

A VC firm knows how to recognize a good idea and strong selling technology when they see one, so don’t be afraid if your product or service is sellable. Venture capital is basically a fundraising technique for companies that have no reservations about exchanging shares in their company for money or financing that will allow them to grow their business.

Venture capital investments can be applied to all types of companies, both tech and non-tech. Just like angel investors, you can also approach venture capital firms if you are a mature company. This form of fundraising is not just limited to newbies. This is definitely a very viable source of financing and investment for your business, provided it has the ability to provide a good growth rate as mentioned above.

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Venture capitalists demand a very, very high interest rate (above 20% per year), but on the bright side, the money provided will also be a large sum: the minimum interest is in the $500,000 range and goes to many millions. They also require a quick return on your investment, so if you are confident in your business’ ability to get off the ground, this is a very good source of funding for you.

Also, after a temporary lapse, the VC market is now well on its way to recovery, so you don’t need to worry about its reliability. One common thing between angel investors and venture capitalists is that they look for capital growth and increased income so that they can recoup the full amount of their investment over a period of time, if you can assure them of that. , then there is nothing stopping you!