In this blog ,we shall discuss in brief , which one is better for your startup, Angel Investor OR Venture Capital.
The difference between Angel Investors & Venture Capitalists is that Angel Investors are generally individuals who invest their own money in companies, where as Venture capitalist invests others money hoping to get a handsome return.
Venture capital Funding as certain criteria to be fulfilled by startups, viz: -
a) Traction : More Often , Venture Capitalists will Fund companies only if they have revenues , beta customers or a product prototype built.
b) Funding Requirements:
If you need to raise less than $1Million , generally you should seek Angel Investing as most Venture Capital Firms [ Unless it's a Micro VC Firm in some cases ] do not even fund below $2 million
c) Sectors :
Most VC's have very specific sectors in which they focus. For instance, Some VC's Focus extensively on EduTech sectors , others invest in Healthcare only. Generally most of the VCs focus on Technology sectors these days due to high ROI.
d) Location :
Most VC Firms invest within 100-150 miles of their location, whereas 60-70% of Angel Investments are done within 40-50 miles of Angel Investor's Location .
The best advice hence would be to raise Angel Investment initially and then gradually move to Venture Capital Funding. A Startup Company can start raising angel funding and then shift to VC Funding later. Generally Startups can raise their initial funding from Angel Investors whereby they can use that funding for building a prototype or to get that first / beta customer and generate initial revenues . Once your startup has achieved the milestone set, they can approach Venture Capitalists.
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