The Difference of Angel Investors vs. Venture Capitalists

The Difference of Angel Investors vs. Venture Capitalists

For business owners, there are a lot of ways to fund your business. You can take a loan from the bank or cooperative, use your own savings, or borrow money from angel investors and venture capitalists.

For investors, one way to grow your money is to become an angel investor and venture capitalist. Both types of investors need trust into the business they’re investing in. But what separates them is their equity holdings in the business.

Angel investors are usually private individuals. They are usually friends or family members that have money who believe in the potential of a particular business idea. What makes angel investors unique is that they are not involved in the management of the company or business. While they may voice their opinions when it comes to long-term strategies, the daily management of the company is not something that occupies high interest for them.

In addition, angel investors are not as rigid as their counterparts affiliated with private firms such as a bank. Because of this, their standards for handling out funds for the business are not as strict.

In contrast, venture capitalists are usually corporations handling out funds to start-up businesses in exchange of a share in the company. Thus, they are usually called equity financiers financing businesses that are risky but have the potential for high return. However, since amounts involved in venture financing are high, business proposals submitted to venture capital firms are subjected to detailed due diligence before getting approved or denied for venture financing.

Facebook is a perfect example of a company that benefited from venture capital financing. Imagine if you’d invested $1,000 in Facebook, like co-founder Eduardo Saverin did just after Mark Zuckerberg launched the siteย in the spring of 2004. Or even $500,000 like Peter Thiel (one of the co-founders of Paypal) did later that year. Both men are now multi-billionaires.

I have been an angel investor twice. The first time was a failed venture into a computer business way back 2006. I lost the bonus that I got in my company before when I invested almost all of it in that business. Lessons learned here is to make sure that you really trust your business partner/s before investing into their business. Make a thorough due diligence not just of the business but also about the backgrounds of your business partners.

For the second time to be an angel investor, I invested into advertising projects early this year. Returns will finally materialize next month before the year ends.ย  ๐Ÿ™‚

Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

15 responses on “The Difference of Angel Investors vs. Venture Capitalists

    • Haha. Sure! Unfortunately, my online account with Google has been banned last Friday for some violations that I really did not incur. I already filed an appeal and hopefully, it gets reinstated. I’m still waiting for their reply until now. There’s no way for me to earn money online without that account. ๐Ÿ™

  1. sir!

    nangyari na rin sa akin yan.
    pag di talaga na reinstate, gawa ka na lang ng bago. you can have it under sa name ng wife or kapatid nyo. just make sure na iba yung home address. ๐Ÿ˜€

  2. Hi Tyron!

    Very interesting article. It got once into my mind to invest into a business but i didnt know that i would be called an angel investor.. ๐Ÿ˜€

    Another interesting opportunity! ๐Ÿ˜€

  3. ako rin failure yong ininvest ko sa isang project. i end-up looking for an angel investor. imbes sana na hindi ako naghahanap ng mag iinvest sa business ko ngaun, ako pa yong luhaan. pero i do believe in bad karma. sana makunsensya yong taong un na hundi na nagbayad sakin. i was betrayed. when i gave her the money, i didnโ€™t even let her sign in a dotted line kasi tiwala ako sa kanya. pero sa panahon ngayon ang hirap na magtiwala sa pera. kung kapatid nga nanakawan ka pa , how much more kapag hindi mo kaano-ano. haaay life! Anyway, more blessings sa mga mabubuting puso pero wag na tayo magpapaloko, dadami lang magiging mapagsamantala. wag tayo masyado mabait kasi tayo yong paboritong utuin ng mga manloloko.

  4. Hello Sir Tyrone. Is there anyway I could contact you re commercialization of a business project which was already test marketed. After reading the article ‘The Difference between Angel Investors and Venture Capitalists’, I thought you may consider the investment opportunity I have. You may get in touch with me thru my email: [email protected]. Look forward to hearing from you. Thank you.

    Yours truly,

    Carlos Abad

  5. I have a very interesting business plan but hit a road block when registering in sec. Im required to have at least 500k to get business license. Anyone interested can talk to me about it after checking my background first. I dont need that amount of money for the business but its a sec. Requirement.

  6. Sir Tyrone,
    Thank you for posting info on the difference between Angel Investors and Venture Capitalists. What is the usual range of percentage share in the gross revenue that is paid to the venture capitalists?

    May I know how to reach you aside from this site? I would like to introduce to you an award-winning Philippine invention (Dept. of Science and Technology or DOST and the World Intellectual Property Organization or WIPO) in the filed of Consumer Electronics, particularly amplifiers, which has gained the attention of some Filipino audiophiles.

    The Inventor is currently in search of Angelpreneurs and would like very much to be in touch with you after learning from me that I chanced upon your posting in the Internet.

    Thank you so much.

    Virgilio (Gil) M. Banaria
    (632) 09195645670
    (632) 09178656961

  7. Sir Tyrone, meron po bang companies/brokers (preferably may online presence) na tumutulong sa mga gusto maging angel investor dito sa Pilipinas para hindi na sira mahirapan maghanap ng startups/businesses na pagiinvestan?

    • Hi Alvin,

      The famous company for angel investors is the MFT Group of companies headed by their very young CEO Mica Tan. However, I think they require a minimum of Php 1 million capital to be invested. I will be joining a peer to peer lending company also. It will definitely be online. You might want to be a creditor to a debtor. Will let you know the full details once I joined.

    • Yeah, I’m looking forward to your article on being a creditor/debtor. Thanks and good luck to your future ventures.

  8. Hi I am looking for an Angel investor who would like to invest with my Start up business Idea! There is a high demand in the market and the concept is one of a kind. Please email me at [email protected] or you can contact me at 09167151681. Please feel free to contact me for more details.

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