What Is the Difference Between an Angel Investor Or Venture Capital Database

I have received the question: What is the Difference Between an Angel Investor or Venture Capital Database?  The answer has more to do with the differences between the two industries than it has to do with differences between the actual databases.  In this article I answer this question by explaining what makes a venture capital firm different from an angel investor.

  • Size of investment: An angel investor invests significantly less than a venture capital firm on average.  This reflects the size of the business as well.  A smaller business or start-up will require far less capital to expand than a midsized company or growth company like those that venture capitalists typically invest in. 
  • Size of the fund:  A venture capital fund will typically have more capital in the fund, pooled from VC limited partners.  This allows for larger investments and more businesses it can invest in.  An angel investor may invest alone or partner with only a couple other angels for a deal.  Angels will also have significantly less capital to commit to the business, which also is a reflection of the risk associated with the investment because it is a lone investor in the company and not a group of investors committing capital at a shared risk but one that is spread among the investors and not limited to a single investor.
  • Investor profession: an angel will often either be retired or only investing on a part-time basis.  Often the angel is a retired entrepreneur or venture capitalist.  Venture capitalists on the other hand are professional investors and typically risking the money of the limited partners, although they may put their own money in the fund too to show that they have some “skin in the game”.

The differences between angels and venture capital funds should illustrate the difference between databases of each investor group.

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