Do you know the difference between a business angel and venture capital company? Do you know which one you should choose for your business? Knowing the fundamental differences is the key to making a wise decision and achieving long term success.
Business Angel
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Also known as private investors, or investor angels
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They are individuals who are independently wealthy and use their own money
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Usually partner with businesses that are in the start up or early stage
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Will invest up to one million dollars or more
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Fairly easy to negotiate with, providing you meet their criteria
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Look for businesses that are within their own areas of expertise
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Is more likely to be actively involved with your business and help with major decisions
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Willing to teach you what they know about the business world
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Will share their business contacts with you
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Will help you start making a profit in as short amount of time as possible.
Venture Capital
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Is a corporate entity
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They pool their money from various sources, public and private
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They look for businesses that are in a high-growth industry like technology or innovation.
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Will invest up to ten million dollars
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Have very strict criteria to meet, can be a lengthy process
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Do not usually invest in start-ups; they like well established companies
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They usually only invest when economic times are good
Business Angels and Venture Capital companies are similar in the sense that they are investing their money to receive an ROI (return on investment.) They will most likely want part ownership in your company, or take a percentage of the profits. They will also require an exit strategy ? once they?ve made their return they will exit out of the partnership.
Think of a business angel as a ?mom and pop? shop where friendly service is the norm, and a venture capital company as a ?big box? store where you get what you need but they?ll never remember your name. A bit of an exaggeration perhaps, but you get the point.
About the Author
One of the best websites in this regard is entrepreneurinvestornetwork.com.au, which aims at uniting angel investors looking for business investments in Australia with budding entrepreneurs in the country.Log on to the website today. You will not be disappointed.
Jeff Bussgang, Partner Flybridge Capital Partners, Can Women Master the VC Game?
Source: http://www.servicedeliveryexcellence.com/venture-capital-partnerships/
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