Hi it's Brett Cenkus the right brain business attorney and today we're doing
another what's the difference between so today we're talking about what's the
difference between angel investors and venture capitalists as is usually the
case when I do these the answer is not much I mean at least from a broad
perspective angel investors and venture capitals both invest money into private
companies hoping that they'll grow right so they put money in almost always as an
equity position meaning they take stock or something hoping for a company to
grow now angel investors tend to operate with their own money I mean it's kind of
what would define an angel investors they're using their own cash and
sometimes they it could be someone who has a full-time job doing something else
and they're just looking for small deals private companies who need growth
capital sometimes they're organized more more formally sometimes they have clubs
right they're still sort of each doing their own thing but they're trying to
source deals together other times you will see some groups that call
themselves like the Silicon Valley Angels I don't know if they're still around but
they're really kind of like a venture capitalist a little bit and so venture
capitalist what defines them is they're using other people's money so they
usually have much bigger pools of money from pension funds and sovereign wealth
funds and other very well-heeled private individuals and family funds and things
like that so big pools of capital so they're using other people's money they
may use a little bit of their own but fundamentally they're managing other people's
money that's the big difference between the two because venture capitalists have
much larger pools of money they're looking for deals that are larger
because if you're managing 100 million dollar fund it doesn't make sense to do
that in $250,000 chunks I mean you'd have 400 investments and you can't
manage that all so venture capitals are looking for bigger deals which means
they're looking for companies that are a little bit further along the growth of
the life cycle of a company than say an angel investor so an angel investor
might put in $100,000 $500,000 in a seed stage or even friends and
family kind of round deal very early on if venture capitals won't get involved
until series A series B Series C so you've heard me talk before the
financing all proceeds like that you've got to got your friends of family seed
and then ABCD and there's nuances there's you know a - there's all sorts
of stuff people come up with but the point is the rounds get I mean the
company continues to grow derisk need more capital to grow on their way out
the door both angels and VCs are usually looking for homeruns they're not
interested in investing in my law firm they couldn't legally I guess because
they're you know not allowed to have investors like that unless they're
licensed lawyers but the point being they don't want little professional
services businesses they don't want to invest in cleaning businesses and they
want things that can really scale angels and VCs tend to be the same way although
angels sometimes are a little bit more opportunistic maybe a little bit more
interested in things like bars and restaurants and stuff like that but
again the broad point is they're very similar slightly different sort of at
the at the at the margins but they're both looking to invest the capital and
the companies that are gonna grow and grow quickly and large a few questions
about early-stage financing angel investors venture capitalists rounds
how you structure those deals equity versus debt give me a call drop me a
line Thanks