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Angel Investors V/S Venture Capital Funds

What is the difference between Angel Investors & Venture Capital Funds?

Non greek version anyone?

Comments

  • Angel investors

    These are rich gentlemen. They finance startup companies for getting partial ownership and or assured returns on investment, after few years.They can give debt (i.e. just like moneylenders and banks) or Equity (i.e. partial ownership). But mostly they play in the equity field.
    What is the need of Angel Investors?

    You can get money from Banks / Bonds (Debt) or IPO/Venture Capitalist (Equity), if your business project is likely to bear success based on previous experiance.
    For example: Pharmaceuticals, Dairy, Engineering instruments, Mining, Telecom, Textiles, Oil Refinery etc.
    But they may not get interested in you, if you talk about untried and untested business plans / product or fields.
    Imagine Steve Jobs requesting SBI Bank Manager to give him business loan in 1970s to start Apple Computers,
    or Same Steve Jobs launching IPO of Apple in NewYork Stock exchange during that time!
    But there was an angel investor Mike Markkula, who actually believed in his plan and gave him some money and got 1/3rd ownership in the company in 1977.
    Angel investor doesn’t mind taking huge risk by helping even small timers with totally unique and untested idea, if he think that it’ll grow up huge success in future.
    Similarly, Amazon online shopping website and Starbucks coffee chain also started with Angel Investors.

    Venture capital

    Venture Capital is a company that gives you money, to start your company or to expand your company but in return they demand part of ownership.
    They deal with only ‘big’ things, ‘big’ projects, ‘big’ investments. They won’t help me to open an ice-cream parlour in Gujarat University despite the fact that its monthly revenue will be higher than SBI General Manager’s salary.
    Copy pasting example of Ojasventure, India
    We invest in technology based businesses in sectors such as Mobile technology, Telecom, Software.
    We make an initial investment of US $ 250,000 to US $ 1.5 million.
    How do they get money?

    Ofcourse money doesn’t fall from sky, these Venture Capitalist companies themselves borrow money from other companies like mutual funds, pension funds or they may be issuing their own ‘bonds’ to get money.
    How do they operate?

    They’ve their own team of Management experts, corporate lawyers, chartered accountant, and business consultants. They study your business plan, approve the money.
    They’ll demand seats in your company’s board of directors to Influence the Decision Making in your company, according to their requirement and so on…

    source...mrunal.org
  • Do angel investors and venture capitalists fall into the category of 'promoters' or are promoters entirely different?
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