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What is the difference between Angel Investor and Venture Capitalist?
The difference is clearly stated in their names itself, Angel investor is an individually who can be your friend, family or a professional investor, but he is individual and hence his limitation for investment is also limited. Angel investors are the people who have closely seen you grow your company. The advantages of Angle investor are. They provide funding but not more than 1cr above, they are return minded but not to core, they may ask for some collaterals, as they know you with regard to abilities they will give you more time. The disadvantages are they may or may not help you in your business; they may be just investor and not bring in Brain Capital.
The Venture Capital investors or so called VC’s are group of people having capital firm which has funds to invest. The advantages are they are clear money minded, they work along with you helping with people who have domain expertise, they help you in providing funds if your requirement is above 1cr, they don’t ask for collaterals, they come with clear understanding as to when to exit. The disadvantages are you cannot relax need to deliver as agreed, if you fail then you will be sent home which you would have read many times the founder is shown the door.
So what happens if the company in which investment was done undergoes losses. The angel investor may not suffer much as in most cases he would had some backing done at least to 50% of the amount he had invested, but it is venture capitalist who losses it big time, hence they come with higher risk hence also look for higher returns.