Venture Capital vs. Angel Investors: Which is right for you?

Image for post
Image for post

Differences in Venture Capital vs. Angel Investors

Before I lay out the advantages and disadvantages to working with each group it is important that we set the foundation for understanding their differences.

Advantages/Disadvantages of Angel Investors

Some advantages of working with angel investors include:

  • They are more willing to invest in a startup purely based on the idea and little traction to-date.
  • Landing an angel investor (a lead investor) is often a signal to other investors that they should pay attention to your startup.
  • Some angels invest as part of a syndicated group and therefore they may not be making individual investing decisions.
  • They amount of capital that some angels are willing to invest can be small. So, you might need multiple angels even in your early funding rounds.

Advantages/Disadvantages of Venture Capital

Some advantages of working with venture capital include:

  • Since venture capitalists invest in startups for a living they are well-versed in what it takes to be successful.
  • They invest larger dollar amounts.
  • VCs often include conditions as part of their investments such as seats on your Board of Directors and other covenants.
  • Compared to angel investors many venture capital firms are less active in the daily operations of your startup.

Written by

I’m a former C-level banking exec. and 3x startup founder leading a corporate innovation/product team and have helped companies raise over $500M in funding.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store