Post by Trade Coach on May 3, 2022 21:11:58 GMT 1
Venture Capital And Angel Investment: What Is The Difference Between Them?
Sometimes you will read or hear that someone has received a venture capital or angel investment, what do these financial terms mean to you?
Most times entrepreneurs that are new to financial terms do mix the two up. Therefore, what does it really mean to receive venture capital or angel investment?
Both angel investment and venture capital provide small businesses with much needed capital. But we need to understand the difference between the two and how they work.
As Nigerians, I want us to define and understand what Startup really means; many entrepreneurs in Nigeria do not actually understand what startup means or stands for. So follow us as we break it down for proper understanding.
What is a Startup?
According to Investopedia, the term startup refers to a company in the first stages of operations. Startups are founded by one or more entrepreneurs who want to develop a product or service for which they believe there is demand.
These companies according to them generally start with high costs and limited revenue, which is why they look for capital from a variety of sources such as venture capitalists becomes necessary.
A startup company works around a team, there is always a group of people coming together to run the business. The business is capital intensive, and therefore they will need external funding in most cases to start-up its activities. Can you see the difference between a startup and start-up?
Startup business owners have their main purpose as to grow very fast, they consider themselves as entrepreneurs, but their own entrepreneurship is not as small business owners.
To contrast with this definition given above about startup, let us look at Small Scale Enterprise or Small Business. A small business is usually based around one or two partners, with a very limited team if any. Its purpose is to grow and survive as much as possible without looking for external funding, this ensures that it is not capital demanding. They are usually averse to accepting huge capital investment into their businesses because of fear of failure. They don’t want to be dragged about if eventually the business fails.
An entrepreneur is someone who has an entrepreneurial mindset, who wants to make a difference for themselves and others by building a viable business model around a team.
Therefore, generally speaking, a startup company is a company that operates at a young level, it has a great display of potential economic activity, and it can have a limited but growing client base with a highly motivated team.
The company is usually based on innovative idea that is capable of improving the lots of people in a region or a community. The members of the team are highly motivated and are willing to put in hard work to achieve great results.
What is venture capital?
A venture capital is a type of investment that is invested by an individual or group into early stage startups that have high risk and high potentials of profit making.
Look at the key words here. They are high risk. Why should I invest in a business that I know from the beginning that it is high risk? They are capable of High Return on Investment is the answer.
What is an Angel Investment?
An angel investment is money or funds invested into a startup by an individual or investor. An angel investment is also significantly lower than what a venture capitalist can invest into a startup.
An angel investor is usually a wealthy private investor. They come in different shapes and from different backgrounds, and may have held leadership positions in some industries in the past.
The amount of capital invested varies. Angel investors do not have the capacity to invest millions or billions of Naira into startups like Venture Capitalists.
In our subsequent write-ups we are going to bring to you sources from where you meet both types of investors.
Our company is one of the best companies in Export and Importation businesses in Nigeria today, we train individuals and corporate organizations on how to do Export, Major and Mini Import business the right way; if you are interested, please contact the admin of this forum now.
Sometimes you will read or hear that someone has received a venture capital or angel investment, what do these financial terms mean to you?
Most times entrepreneurs that are new to financial terms do mix the two up. Therefore, what does it really mean to receive venture capital or angel investment?
Both angel investment and venture capital provide small businesses with much needed capital. But we need to understand the difference between the two and how they work.
As Nigerians, I want us to define and understand what Startup really means; many entrepreneurs in Nigeria do not actually understand what startup means or stands for. So follow us as we break it down for proper understanding.
What is a Startup?
According to Investopedia, the term startup refers to a company in the first stages of operations. Startups are founded by one or more entrepreneurs who want to develop a product or service for which they believe there is demand.
These companies according to them generally start with high costs and limited revenue, which is why they look for capital from a variety of sources such as venture capitalists becomes necessary.
A startup company works around a team, there is always a group of people coming together to run the business. The business is capital intensive, and therefore they will need external funding in most cases to start-up its activities. Can you see the difference between a startup and start-up?
Startup business owners have their main purpose as to grow very fast, they consider themselves as entrepreneurs, but their own entrepreneurship is not as small business owners.
To contrast with this definition given above about startup, let us look at Small Scale Enterprise or Small Business. A small business is usually based around one or two partners, with a very limited team if any. Its purpose is to grow and survive as much as possible without looking for external funding, this ensures that it is not capital demanding. They are usually averse to accepting huge capital investment into their businesses because of fear of failure. They don’t want to be dragged about if eventually the business fails.
An entrepreneur is someone who has an entrepreneurial mindset, who wants to make a difference for themselves and others by building a viable business model around a team.
Therefore, generally speaking, a startup company is a company that operates at a young level, it has a great display of potential economic activity, and it can have a limited but growing client base with a highly motivated team.
The company is usually based on innovative idea that is capable of improving the lots of people in a region or a community. The members of the team are highly motivated and are willing to put in hard work to achieve great results.
What is venture capital?
A venture capital is a type of investment that is invested by an individual or group into early stage startups that have high risk and high potentials of profit making.
Look at the key words here. They are high risk. Why should I invest in a business that I know from the beginning that it is high risk? They are capable of High Return on Investment is the answer.
What is an Angel Investment?
An angel investment is money or funds invested into a startup by an individual or investor. An angel investment is also significantly lower than what a venture capitalist can invest into a startup.
An angel investor is usually a wealthy private investor. They come in different shapes and from different backgrounds, and may have held leadership positions in some industries in the past.
The amount of capital invested varies. Angel investors do not have the capacity to invest millions or billions of Naira into startups like Venture Capitalists.
In our subsequent write-ups we are going to bring to you sources from where you meet both types of investors.
Our company is one of the best companies in Export and Importation businesses in Nigeria today, we train individuals and corporate organizations on how to do Export, Major and Mini Import business the right way; if you are interested, please contact the admin of this forum now.
