Angel investors are rich individuals who can help young enterprises and start-ups get off the ground financially. Angel investors in Indonesia, or anywhere in the world, frequently purchase a portion of a start-up’s stock and will contribute a considerable sum of money to help a new venture get off the ground.
The amount contributed by these investors will vary depending on the start-up’s demands and the industry in which it operates. Angel investors are frequently the preferred investors of firms that do not fit the standards for bank financing and are unable to entice a venture capital (VC) firm.
Differences Between Angel Investors and Venture Capitalists
All investors can be divided into two broad groups – angel investors and venture capitalists. People who invest in nascent enterprises are known as angel investors and venture capitalists. When they invest their money, they both take calculated risks in the hopes of achieving a high return on investment. There are some key differences between angel investors and venture capitalists.
1. Angel Investors
Angel investors are licensed investors who invest in small firms using their own money. This should come as no surprise given the fact that many angel investors are also small business owners. They prefer to make investments that will help them grow their company rather than those that will yield profits quickly.
The reason why angel investors choose specific businesses to invest in is because they expect the business to become lucrative in the future. As a result, angel investors tend to take greater risks than venture capitalists.
Another significant distinction between angel investors and venture capitalists is the quantity of business cash that both types of investors often contribute. The average angel investor contributes US$330,000, according to the Small Business Administration, which is significantly less than the average venture capitalist investment. Angel investors and venture capitalists have distinct expectations for their investments. Angel investors typically expect a 20% to 25% return on their investment.