Difference between Venture Capital and Business Angels

venture capital

There are many differences (and some similarities) between Venture Capital and Business Angel funding. Here we list the main differences:

  1. Venture Capital is broadly the term used when talking about funding from organisations or groups of Investors to fast-growth young companies. These are mainly investing other people’s money that has been raised through Venture Capital funds.
  2. Business Angel funding comes direct from individuals (or syndicates of Business Angels) and is therefore their own money that is used.
  3. Size of investment: Venture Capital will be able to fund much larger opportunities. Starting around $2M up to many tens of millions. Business Angels will be looking at much smaller investments between $10k & $50k typically, however larger amounts are available when Angels band together in a syndicate to invest.
  4. Risk: Venture Capital funds are custodians of other peoples money and will only look at well proven projects that have already developed some traction within their marketplace. Business Angels are investing their own money and so can decide to take some greater risk if they choose to do so.
  5. Stage of business: Given the risk profile of both, Venture Capital organisations will not be investing in raw start-ups. They will be looking to enter at the point that a company is looking for funds to expand. Start-ups and very early stage businesses must look to Business Angels for funding.

Lawrence

Studied Engineering at Brunel University, and Management Science at Imperial College, London. After running a couple of small engineering companies spent time at HP, Digital, and Cray Supercomputers. Business Planning consultant & presenter on University MBA courses. Non-exec to several SMEs, on research board of major UK charity. Managing Director of CompanyPartners.com and alumni of Imperial College's Business School.

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