Lecture Notes on Angel Investors vs. Venture Capitalists

Introduction

Importance of understanding the difference between angel investors and venture capitalists when raising funding.

Profile: Typically individuals such as retired executives or successful entrepreneurs.
Funding Source: Invest their own money.
Investment Freedom: No external approvals needed; more flexible on investment return timeframes.
Investment Stage: Target very early-stage companies (pre-revenue or pre-product).
Investment Amount: Generally write checks from $5,000 to $50,000.
Control and Influence: Typically do not take board seats or ask for control.

Profile: Raise funds from others, namely Limited Partners (LPs).
Funding Source: Utilize large sums from LPs.
Investment Expectations: Set timeframes for returns due to LPs.
Investment Stage: Focus on later-stage companies with some traction and customers.
Investment Amount: Invest millions in rounds (Series A, B, C, etc.).
Equity and Control: Seek 20-30% equity; often require board seats which may influence company direction.

Stage of Investment: Angel investors focus on very early-stage; VCs on growth-stage.
Amount of Investment: Angels offer smaller sums; VCs invest significantly larger amounts.
Control and Influence: VCs may take active roles in company decisions; angels are less controlling.

Investment Needs: Determine how much funding is required.
- <$100,000: Angels are more suitable.
- $1,000,000: Consider VCs and learn about pitching to them.
Finding the Right Partner: Importance of choosing investors who align with business goals and can open doors.

Building a positive relationship with investors is crucial.
Investors can provide vital connections and resources.
Long-term relationships with investors can significantly impact business growth.

Both angels and VCs aim to help businesses succeed, but approaches differ.
Choose partners wisely based on fit, resources, and potential for opening opportunities.

Further Learning: Links to learn more about angel investing and other related entrepreneurial topics.
Presenter: Greg Reyes.