venture capital, because in many people confused them, especially that the two aim to finance the entrepreneurs and to reach them through conferences and seminars for investors, but in fact they are different in a set of points:
- Venture Capital is owned and operated by a group of professional investors who have experience in corporate finance operations and can invest their money or other funds.
But angelic investment is often dependent on one individual with wealth and investment, part of his wealth in startups, usually being a former entrepreneur and enjoying the sense of adventure. He has a desire to keep up with developments in an industry or to guide a new generation of entrepreneurs.
- Venture capital tends to invest in promising companies in their initial stages and already existing companies that have high market value and potential for future growth and thus reduce the risk of losing their money.
Angelic investment is more focused on the financing of start-ups, and business angels have a higher sense of risk and choose areas that are within their own interests and which are lucrative. This is why entrepreneurs are advised to target business angels after proving their position in the market. They need to expand on venture capital.
The value of financing available to entrepreneurs in venture capital is different from angelic investment, which is reflected in the distribution of investment returns. Capitalistically, venture capital brings in more capital that can reach millions of dollars and thus yield an investment return of between 25% and 35% of the project. Angelic investment offers less funding by thousands and thus returns between 20% and 25%.
A clear difference between venture capital and angelic investment is the role played by the investor in both cases in exchange for financing the project. In the first case, the investor is keen to play a role in managing the company and obtaining a seat on its board of directors.
In the second case, we note that business angels prefer to take non-executive management positions or play the role of mentors with entrepreneurs by offering suggestions on how best to manage their project and how to help them make decisions and build strong networks with the actors in their field.
