In2up ? Venture Capitalists VS Angel Investors

Last week I attended a startup conference organized by Google in the English Silicon Valley ? London Roundabout. Just in case somebody does not know, London Roundabout is a cluster of British startup (mostly web) companies in the area called Old Street. According to my research there are more than hundred startup firms in this zone such as Dopplr, Last FM, TweetDeck, AMEE and others including our last week guest GoSquared. Every week there are numbers of networking events, conferences and other interesting stuff happening there and attending them is definitely worth doing. In some events you can even get free beer & pizza and make good connections with investors and business angels.

Let?s come back to the experience I had. This event was devoted to the topic ?How to find a right investor for your business and the differences in investing between Venture Capital companies (VC) and Angel Investors. I want to share with you guys the lesson I have learnt there.?If you already have a good idea and built up a strong business plan you need to find an investor to inject finance into your business, unless you have your own funding. So, what kind of finance will you be going for? Venture Capital or Angel Investors? Please note it is two different types of investing and below is a description of both.

Venture Capital firms are the prominent companies with huge budgets usually managed by group of very wealthy individuals. Only if you are 100% confident in what you are doing, have a strong business plan, and ideally got track records of running successful businesses and do not seem to be a freshman ? go for it, go and talk them business. A good thing about VCs is that you can raise some really good money up to few hundred thousands of dollars from these guys. A bad thing, if something goes wrong, the VC firm may easily take management of the company without even considering your opinion. Usually they own a big stake of your company in exchange of huge capital flow injections (up to few millions). It?s worth saying that people from VC firms are mostly interested in financial side of the idea, and potential return on their invested equity. They will not be mentoring you or explaining how to make you idea work. They give you money and the rest entirely depends on you.

Angel investors have a different approach to ?the clients?. First of all, their budget is not as big as venture capitalists budget. They typically invest up to a few thousands dollars (usually up to 20K). Good news about them is that they do not just give you money and leave you on your own, but they can also become your right hand, your mentor. They spend long hours with you in order to find out how to make the idea work and progress.

There is always a trade-off in what you are looking for, there is no an ideal choice. It?s quite challenging though to find a right investor for your business. And it entirely depends on you who to entrust your idea and develop the business with.

Source: http://www.in2up.com/investors/venture-capitalists-vs-angel-investors/

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