There’s a lot of business terminology out there, and it can get confusing to keep it all straight. For example, what’s the difference between venture capitalists and angel investors? If you need a straightforward explanation, so you don’t feel like a deer in the headlights the next time it’s brought up in conversation, look no further.
Who are Venture Capitalists?
Venture capitalists, also known as VCs, are private equity investors or firms who provide capital to high-growth potential companies, like start-ups, early-stage companies, or small businesses that wish to expand. Since venture capitalists seek high growth potential companies, there is often high risk associated with investing.
What is Private Equity?
Private equity is investments made from high net-worth individuals or companies in businesses that are not publicly traded. Private equity investments are often pursued to obtain a high return on investment (ROI). Private equity differs from venture capitalists because they buy and invest in different companies in different amounts of capital. Private equity firms usually invest in more established companies as opposed to venture capitalists who invest in companies in their early stages of growth.
Who are Angel Investors?
Angel investors are individuals who provide capital for businesses, usually in exchange for ownership equity. The funds are often a one-time investment to get the company off the ground or support the company during the early stages of business. Angel investors are typically individuals with high net worth who invest their own money.
How to Find an Investor?
As with most big decisions, do your research. Get clear on what type of investor you’re looking for, what you need, and what you’re asking of your investors. There are excellent resources online to help you search for angel investors or give you an idea of the best venture capitalists.
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