Getting funds for your business is no easy feat. Whether it is from your own money or obtaining loans and investments from investors, having the appropriate funds to start a business is essential. Depending on how much funds your business requires, approaching venture capitalists or angel investors might be your best bet.
Here is how venture capitalists and angel investors can potentially help you in your business goals.
Who are Venture Capitalists and Angel Investors?
Venture capitalists and angel investors are either individuals or companies who invest a certain amount of money into a startup or an existing business. In hopes of having a healthy ROI (return on investment), these investors will take a calculated risk when it comes to investing in various businesses.
What is the Difference?
A venture capitalist can either be an individual or a firm that invests in companies, typically using money pooled from various investment companies or corporations. Venture capitalists do not usually use their own money to invest in businesses.
An angel investor, on the other hand, is an accredited investor who typically uses their own funds to invest in small companies. Often, they are required to have a net worth of $1 million or more and have a certain annual income. Angel investors are typically business owners or family and friends. Therefore, their repayment terms are usually more reasonable or lower than a venture capitalist’s term.
What do They Invest in?
Venture capitalists and angel investors will invest in a company depending on the different stages of a business. For instance, venture capitalists will tend to lean toward investing in an established business to reduce their risk of losing investments. Angel investors, however, are more likely to put their money into businesses that are just starting out.
If you are an entrepreneur who has a new business idea, roping in an angel investor to fund your business might be a better solution. If you are an established business looking to expand your company, you can try seeking help from a venture capitalist.
How Much Are They Willing to Invest?
One key difference between a venture capitalist and an angel investor is the amount of money both investors are agreeing to put down. Venture capitalists will often put more capital into businesses as compared to angel investors. They would, however, expect a higher percentage of returns than angel investors.
Venture capitalists might expect an ROI anywhere between 20%-30%, whereas angel investors may want a return between 10%-20%.
Getting the Right Investor for Your business
Regardless of what business you are in, you will need to consider having the right investor for your business. Whether you are looking for a venture capitalist or an angel investor, finding investors that align with your business is the key to having a successful company.
With an interest in investing in entrepreneurs that require startup funds and co-founding a $10 million angel syndicate / VC fund, A. Donahue Baker is certainly the right investor for your business. Whether you are looking to build a real estate business or expand your existing company, be sure to reach out to A. Donahue Baker to create a reliable and committed business partnership.