Startup businesses that have reached a certain stage of development often wonder about their prospects for receiving funding through a venture capital firm or an angel investor. There are some important differences between these types of investors, and it pays to know exactly what you are getting into before committing to an investment.
Dan Lok, a startup expert, explains how angel investors and venture capital firms are similar and different, offering some tips for companies that want to be recognized by these investors.
What is an Angel Investor?
An angel investor is known as a private investor, angel funder, or seed investor. These investors are high net worth individuals who see value in providing financial support to small entrepreneurs and startup companies. Generally, angel investors receive ownership equity in the enterprise. Sometimes, angel investors can come from the business owner’s family or friend group.
Angel investors may inject a significant amount of cash to get a business off the ground. They may also be involved in providing cash at regular intervals to support the growth of the business.
The primary difference between angel investors and regular venture capital firms is that angel investors are more likely to be able to fund an early-stage startup. This is because they are using their own money and do not have a corporate interest. Startups find angel investment attractive because it is less risky than other kinds of funding.
Angel investors have to protect themselves financially, so they