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Date Created: 12/20/15
The Difference of Venture Capitalists and Angel Investors Making your business idea attractive to banks to grant you a loan as startup or expansion capital may take a lot of time especially because banks are very strict when it comes to their requirements and in assessing the capability of the business to repay the loan. For this reason, some entrepreneurs look for investors who are known to provide funding for startups and growing companies. Venture capitalists and angel investors are two kinds of investors that are known to fund businesses that lack capital to meet their business goals. Venture capital firms and angel investors provide funding for unproven business ideas. Such ideas may not be attract funding from regular bank loans. Both venture capital firms and angel investors are operating in the same financial field, and they usually take an ownership interest of the funded business. However, there are also things that make these investors distinct from each other. Venture capital operations are typically corporate entities which use funds from other investors, often large institutions and manage the funds by investing it in growth businesses. Angel investors are generally wealthy individuals or group of individuals who independently invest their own earned funds. Angel investors can be anyone who has sufficient amount of cash to back a business, specifically starting ones. But most of the time, angels belong to a network where they can also pool their money and provide funding to starting business or those that need second round of financing. When it comes to the size of the deal, venture capitalists and angels are also different. A venture capitalist will generally consider larger projects than angels would. The amount of money that angels can provide ranges from $25,000 to $100,000, if the angel investor acts as an individual. Venture capitalists deal with bigger transactions and offer funds between $500,000 and $10 million or even higher.
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