In this article I compare Angel Investor vs. Venture Capital Databases to identify the main differences? Of course, the primary difference is the investors in each database; i.e. the angel investor database includes angel investors while the venture capital database includes venture capital firms. So, then you may be wondering “What is the difference between a VC firm and an angel investor?”
The main differences between angels and venture capitalists are as follows:
Investment Size: The size of investments differ by investor, but most often an angel will commit a much smaller amount of capital to a small business or entrepreneur than a venture capital firm would. This is true for a number of reasons including: the stage of the business, investable income, risk and structure of the investor and/or fund.
What is the stage of the business?: This is a very important consideration, because angels typically invest in small businesses at the really early stages of the firm. This requires a lot deal of risk which lowers the investors’ capital commitment. (Would you place a larger bet on something with a 70% of success or with a 30-50% chance?) But that’s often not a big obstacle to the small business because in the first year or so of operation, the business needs less money from outside investors. But when the company has matured and proven it has the management team or the business idea that could develop into a bigger and more lucrative business, a venture capitalist might step in.
Structure of the fund: An angel investor is usually a retired business professional or current business professional who was successful enough in his or her career to have a store of capital for investment in businesses like yours. A venture capitalist though is a professional investor that manages a fund for a group of investors. This is a big difference you should consider when deciding which investor you’d like to partner with.