Venture capitalist and an angel investor — both of these invest in a new company. they believe in the potential of the promoter as well as the company. However, there are many differences between venture capitalist and an angel investor. The following table enumerate these differences.
| Basis of Comparison | Venture Capitalist | Angel Investor |
|---|---|---|
| Source of Fund | A venture capitalist invests in small businesses by pooling money from big corporations, banks, investment companies, and pension funds through a professionally managed fund. The venture capitalist normally does not invest their own money in the small business or venture. | An angel investor is a person with a high net worth and the money they invest in start-ups is their own savings. They do not channel the investment from someone else. |
| Investor Type | Though venture capitalists can be an individual, they typically are large risk capital companies. | An angel investor is always an individual with surplus savings to help a budding business. |
| Time of Entry | Venture capitalists typically invest in small but rapidly growing businesses to minimize risk and maximize return for their clients whose money is channeled as a venture investment. They enter a business at its later stage of development as compared to angel investors. | Angel investors typically come much earlier in the picture as compared to venture capitalists. They take more risk by investing in a business at its initial phase. Their investment works as a seed for the startup hence they are called seed investors. |
| Amount of Investment | Investment done by venture capitalists is often huge as compared to angel investors. The reason is very clear – venture capitalists have a huge pool of money coming from different individuals and different sources. | As angel investors invest in their private fund, their amount of investment is normally much lower compared to venture capitalists. |
| Position in Business | Venture capitalists need to save their client’s money so they cannot afford to give money and sit on the sidelines. Once a venture capitalist invests in a certain business they exert more power and are typically given a seat on the board. They are involved in the decision-making process of the business. | An angel investor may or may not have knowledge and experience in running a business. They may have a say in the business but typically the investment is done due to a personal link with the entrepreneur. So, an angel investor does not necessarily exert any power over the operation of decision-making or the business. |
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