Angel Investors vs. Venture Capitalists

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Angel Investors:

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• High-net-worth individuals who invest their personal funds into startups, primarily at the early stages.
• Typically operate:
  • Individually: Single investors providing funding.
  • In Groups: Organized collectives of angels pooling resources.
  • Through Angel Funds: Structured funds that resemble venture capital operations.
• Provide mentorship, personal networks, and smaller funding amounts (generally $5,000 to $250,000).
• Are accredited investors as per SEC regulations, requiring:
  • Annual income exceeding $200,000 ($300,000 for joint income) over the last two years.
  • Net worth of $1 million or more (excluding primary residence).

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Venture Capitalists (VCs):

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• Professional investors managing pooled funds from limited partners (LPs) such as institutions, corporations, and high-net-worth individuals.
• Invest significantly larger sums, typically starting at $500,000 and scaling into millions.
• Operate within structured venture funds with defined lifecycles (usually 10 years).
• Focus on scaling companies and achieving substantial returns through exits like acquisitions or IPOs.

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Angels invest their own money, while VCs manage other people’s money.

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