Monday, 20 March 2023

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Angel investors vs. venture capitalists

Angel investors vs. venture capitalists

Angel investors and venture capitalists are two types of private investors who provide funding for early-stage and growth-stage companies. However, there are some key differences between them that we will cover in this article.

Who are angel investors?

High-net-worth individuals who invest in companies at an early stage in exchange for equity in the business are known as angel investors. They frequently invest their own funds and take a more active approach to investment, offering advice and mentoring to the businesses they support. The well-known angel investors in the crypto world include:

  • Roger Ver — He is known as “Bitcoin Jesus” and is an early investor in Bitcoin (BTC) startups, such as, BitPay and Kraken.
  • Barry Silbert — He is the founder and CEO of Digital Currency Group, which invests in and acquires cryptocurrency-related companies.
  • Naval Ravikant — He is the co-founder of AngelList and has invested in projects such as MetaStable, Algorand and others.
  • Charlie Lee — He is the creator of Litecoin and has invested in a number of other cryptocurrency-related startups.

Who are venture capitalists?

Investors who fund startups and early-stage businesses with significant room for growth are known as venture capitalists (VCs). They frequently belong to a professional investment firm or fund and typically make larger investments than angel investors.

Related: Venture capital financing: A beginner’s guide to VC funding in the crypto space

They obtain equity in the business in return for their investment, and they frequently have a say in how the business is operated. When the firm eventually goes public or is acquired, VCs hope to profit by selling their equity. Some well-known VC firms include:

  • Andreessen Horowitz
  • Blockchain Capital
  • Coinbase Ventures
  • Digital Currency Group
  • Polychain Capital
  • Pantera Capital.

Differences between angel investors and venture capitalists

Stage of investment

Angel investors frequently contribute seed money to startups by making investments in early-stage businesses. On the other hand, venture capitalists frequently make investments in later-stage businesses that have already demonstrated strong growth potential.

Size of investment

Compared to venture capitalists, angel investors often invest less money. Unlike venture capitalists, who might invest millions of dollars in a firm, angel investors often make investments between $10,000 and $100,000.

Involvement in the company

Angel investors frequently adopt a…

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