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This question is about what an investor does.
Venture capitalist vs. angel investor
The difference between a venture capitalist and an angel investor is that a venture capitalist can be a company or individual that chooses to invest funding into a startup company, while an angel investor takes the same action, but is just one individual who is typically close to the startup business owner in some way.
Venture capitalists invest money into small businesses or startups with the expectation that their investment will help the company grow, and thus reward them with a profit-share of the revenue in the future. Venture capitalists look for companies that can be considered to have long-term growth opportunities, meaning they will receive a high rate of return on funding.
An angel investor refers to one specific wealthy person that decides to help finance the growth of a small business or startup company. Like venture capitalists, they do this with an expectation of revenue to be gained in the future. Angel investors can sometimes be family members, friends, or just a wealthy individual that wants to make an investment.
Key Takeaways:
| Venture capitalist | Angel investor |
|---|---|
| A venture capitalist can be a company or individual that works for a company that chooses to invest funding into a startup company or small business. | An angel investor refers to one specific wealthy person that decides to help finance the growth of a small business or startup company. |
| Venture capitalists often work for venture capital firms, investment banks, banks, universities, or even insurance companies. | Angel investors can sometimes be family members, friends, or just a wealthy individual that wants to make an investment. |
| The money that a small business owner or startup owner receives is from a company or institution. | The money that a small business owner or startup owner receives is from a specific person, the angel investor. |
| Funding given by a venture capitalist is put towards business operations, and expenses, but sometimes they also "fund" startup companies by providing them access to professionals that work for the venture capitalist firm or other entity. | Funding given by angel investors is put towards business operations and expenses. |
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