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Raising Capital – What’s the difference between angel and venture capital investors?


what’s the difference between angel and

what’s the difference between angel and venture capital investors it’s a great

venture capital investors it’s a great

venture capital investors it’s a great question and one that came in from one

question and one that came in from one

question and one that came in from one of my YouTube viewers

of my YouTube viewers

of my YouTube viewers JGI g7 284 thank you on YouTube and it’s

JGI g7 284 thank you on YouTube and it’s

JGI g7 284 thank you on YouTube and it’s really important I remember when I had

really important I remember when I had

really important I remember when I had my first business I felt like I needed

my first business I felt like I needed

my first business I felt like I needed help and I felt like I needed funding

help and I felt like I needed funding

help and I felt like I needed funding and I didn’t know if I needed to go to

and I didn’t know if I needed to go to

and I didn’t know if I needed to go to an angel investor or venture capital I

an angel investor or venture capital I

an angel investor or venture capital I didn’t know how much money they wanted

didn’t know how much money they wanted

didn’t know how much money they wanted to spend they didn’t know who would be a

to spend they didn’t know who would be a

to spend they didn’t know who would be a good fit for me and the problem is if if

good fit for me and the problem is if if

good fit for me and the problem is if if you don’t know the difference and if you

you don’t know the difference and if you

you don’t know the difference and if you don’t know who you should bring on it

don’t know who you should bring on it

don’t know who you should bring on it could not only waste your time like

could not only waste your time like

could not only waste your time like raising capital is almost a full-time

raising capital is almost a full-time

raising capital is almost a full-time job for your business and so you don’t

job for your business and so you don’t

job for your business and so you don’t want to spend your time going in the

want to spend your time going in the

want to spend your time going in the wrong direction but also bringing on the

wrong direction but also bringing on the

wrong direction but also bringing on the wrong person can really sink your

wrong person can really sink your

wrong person can really sink your company raising money really is like

company raising money really is like

company raising money really is like getting married you have to really pick

getting married you have to really pick

getting married you have to really pick who you bring on because again the wrong

who you bring on because again the wrong

who you bring on because again the wrong person could destroy your company and

person could destroy your company and

person could destroy your company and everything that you’ve worked so hard to

everything that you’ve worked so hard to

everything that you’ve worked so hard to build the vision everything that you

build the vision everything that you

build the vision everything that you believe in could be torn apart because

believe in could be torn apart because

believe in could be torn apart because you brought the wrong person on board so

you brought the wrong person on board so

you brought the wrong person on board so really tread carefully and do your

really tread carefully and do your

really tread carefully and do your homework so here are the main

homework so here are the main

homework so here are the main differences an angel investor is an

differences an angel investor is an

differences an angel investor is an individual they’re one person they

individual they’re one person they

individual they’re one person they either do it as a profession so they are

either do it as a profession so they are

either do it as a profession so they are a professional angel investor they’re

a professional angel investor they’re

a professional angel investor they’re sophisticated they’d like invested in

sophisticated they’d like invested in

sophisticated they’d like invested in the companies as their main business but

the companies as their main business but

the companies as their main business but there’s also a lot of people who are not

there’s also a lot of people who are not

there’s also a lot of people who are not professional who are unsophisticated who

professional who are unsophisticated who

professional who are unsophisticated who have no idea what they’re doing they’re

have no idea what they’re doing they’re

have no idea what they’re doing they’re wealthy individuals there’s an industry

wealthy individuals there’s an industry

wealthy individuals there’s an industry term called DDI which is doctors or

term called DDI which is doctors or

term called DDI which is doctors or dentists with disposable income a lot of

dentists with disposable income a lot of

dentists with disposable income a lot of these ancient Buster’s are like dentists

these ancient Buster’s are like dentists

these ancient Buster’s are like dentists who hate their lives who don’t find

who hate their lives who don’t find

who hate their lives who don’t find satisfaction in their in their career

satisfaction in their in their career

satisfaction in their in their career anymore and they invest in companies as

anymore and they invest in companies as

anymore and they invest in companies as a way to tell their friends about the

a way to tell their friends about the

a way to tell their friends about the things that they’re doing and and live

things that they’re doing and and live

things that they’re doing and and live an exciting life through you they’re not

an exciting life through you they’re not

an exciting life through you they’re not professional investors and so angels are

professional investors and so angels are

professional investors and so angels are all over the map and you really want to

all over the map and you really want to

all over the map and you really want to do your homework to find the ones that

do your homework to find the ones that

do your homework to find the ones that will give you not just money but

will give you not just money but

will give you not just money but connections experience ideas wisdom

connections experience ideas wisdom

connections experience ideas wisdom beyond that you never want to bring on

beyond that you never want to bring on

beyond that you never want to bring on money just for money you need somebody

money just for money you need somebody

money just for money you need somebody who can bring more to the

who can bring more to the

who can bring more to the table and also who believes in what

table and also who believes in what

table and also who believes in what you’re trying to do they don’t just see

you’re trying to do they don’t just see

you’re trying to do they don’t just see an opportunity to make cash but they

an opportunity to make cash but they

an opportunity to make cash but they believe that the change that you’re

believe that the change that you’re

believe that the change that you’re trying to make in this world is a good

trying to make in this world is a good

trying to make in this world is a good one

one

one it’s super important typically angel

it’s super important typically angel

it’s super important typically angel investors do have a higher tolerance for

investors do have a higher tolerance for

investors do have a higher tolerance for risk they are looking at a longer

risk they are looking at a longer

risk they are looking at a longer horizon typically five to eight years

horizon typically five to eight years

horizon typically five to eight years before they’re gonna get their money

before they’re gonna get their money

before they’re gonna get their money back so they’re they’re in it more for

back so they’re they’re in it more for

back so they’re they’re in it more for the long term and if you’re looking at

the long term and if you’re looking at

the long term and if you’re looking at raising less than half a million dollars

raising less than half a million dollars

raising less than half a million dollars for your business and you’re probably

for your business and you’re probably

for your business and you’re probably dealing in the angel investor territory

dealing in the angel investor territory

dealing in the angel investor territory so the angels are the the first capital

so the angels are the the first capital

so the angels are the the first capital that gets you going

that gets you going

that gets you going it could also be your friends and family

it could also be your friends and family

it could also be your friends and family or your own startup money but if you’re

or your own startup money but if you’re

or your own startup money but if you’re going for like a professional investor

going for like a professional investor

going for like a professional investor then you’re going after an angel if you

then you’re going after an angel if you

then you’re going after an angel if you need half a million dollars or less the

need half a million dollars or less the

need half a million dollars or less the next step up is looking at VCS and

next step up is looking at VCS and

next step up is looking at VCS and venture capitalists typically we’ll look

venture capitalists typically we’ll look

venture capitalists typically we’ll look at half a million dollars plus the

at half a million dollars plus the

at half a million dollars plus the reason is it’s the same amount of work

reason is it’s the same amount of work

reason is it’s the same amount of work to do a fifteen million dollar deal as a

to do a fifteen million dollar deal as a

to do a fifteen million dollar deal as a half a million dollar deal and so VCS

half a million dollar deal and so VCS

half a million dollar deal and so VCS don’t like to spend their time working

don’t like to spend their time working

don’t like to spend their time working on these small deals because the payoff

on these small deals because the payoff

on these small deals because the payoff isn’t there they’ll only do it if they

isn’t there they’ll only do it if they

isn’t there they’ll only do it if they really see a lot of opportunity with the

really see a lot of opportunity with the

really see a lot of opportunity with the company and they’ll be involved in

company and they’ll be involved in

company and they’ll be involved in future rounds so they’ll work with you

future rounds so they’ll work with you

future rounds so they’ll work with you on a small scale because they think they

on a small scale because they think they

on a small scale because they think they can take you through a couple rounds of

can take you through a couple rounds of

can take you through a couple rounds of financing and by getting in with you

financing and by getting in with you

financing and by getting in with you early then they’ll you’ll want to go

early then they’ll you’ll want to go

early then they’ll you’ll want to go back with them you know they they’re

back with them you know they they’re

back with them you know they they’re they’re getting their foot in the door

they’re getting their foot in the door

they’re getting their foot in the door at the start but typically VCS don’t

at the start but typically VCS don’t

at the start but typically VCS don’t like startup companies pure startup it’s

like startup companies pure startup it’s

like startup companies pure startup it’s really really hard to get them they want

really really hard to get them they want

really really hard to get them they want to see some momentum with your business

to see some momentum with your business

to see some momentum with your business some traction they want to see a little

some traction they want to see a little

some traction they want to see a little bit of revenue at least to show that hey

bit of revenue at least to show that hey

bit of revenue at least to show that hey you’ve done it this far with some money

you’ve done it this far with some money

you’ve done it this far with some money you can go beyond typically they’re

you can go beyond typically they’re

you can go beyond typically they’re looking at a shorter horizon so they

looking at a shorter horizon so they

looking at a shorter horizon so they want three to five years and they’re

want three to five years and they’re

want three to five years and they’re gonna exit they’ll never invest to buy

gonna exit they’ll never invest to buy

gonna exit they’ll never invest to buy out and in another investor so if you

out and in another investor so if you

out and in another investor so if you had a really bad angel investor and now

had a really bad angel investor and now

had a really bad angel investor and now you’re trying to raise more money to buy

you’re trying to raise more money to buy

you’re trying to raise more money to buy out that angel they’re not going to do

out that angel they’re not going to do

out that angel they’re not going to do it this is why it’s important right you

it this is why it’s important right you

it this is why it’s important right you get the wrong investor they’re stuck

get the wrong investor they’re stuck

get the wrong investor they’re stuck with you forever it’s really really

with you forever it’s really really

with you forever it’s really really really hard to get rid of them and

really hard to get rid of them and

really hard to get rid of them and nobody’s gonna want to come in just to

nobody’s gonna want to come in just to

nobody’s gonna want to come in just to buy them out with VCS they want to see

buy them out with VCS they want to see

buy them out with VCS they want to see that there’s a clear exit strategy so

that there’s a clear exit strategy so

that there’s a clear exit strategy so the two most common ones are

the two most common ones are

the two most common ones are you’re gonna go public so there’s a

you’re gonna go public so there’s a

you’re gonna go public so there’s a there’s an IPO your company goes public

there’s an IPO your company goes public

there’s an IPO your company goes public or you get acquired so some big

or you get acquired so some big

or you get acquired so some big company’s gonna buy you up and pay you a

company’s gonna buy you up and pay you a

company’s gonna buy you up and pay you a good price for it

good price for it

good price for it the third less common one is a

the third less common one is a

the third less common one is a management buyout so you buy back the

management buyout so you buy back the

management buyout so you buy back the shares from the VCS but they don’t want

shares from the VCS but they don’t want

shares from the VCS but they don’t want to see that they want to see massive

to see that they want to see massive

to see that they want to see massive growth they want to see that you’re

growth they want to see that you’re

growth they want to see that you’re gonna go out and build something

gonna go out and build something

gonna go out and build something humongous make tons of money and

humongous make tons of money and

humongous make tons of money and someone’s going to want to buy you up

someone’s going to want to buy you up

someone’s going to want to buy you up VCS are professional they pool money so

VCS are professional they pool money so

VCS are professional they pool money so they have people who give them money and

they have people who give them money and

they have people who give them money and then they’re in charge of going out and

then they’re in charge of going out and

then they’re in charge of going out and investing it and they typically focus on

investing it and they typically focus on

investing it and they typically focus on specific areas angels are all over the

specific areas angels are all over the

specific areas angels are all over the map again some will invest in an area

map again some will invest in an area

map again some will invest in an area that they have expertise in and others

that they have expertise in and others

that they have expertise in and others will just invest because they think they

will just invest because they think they

will just invest because they think they can make money but with VCS they’re

can make money but with VCS they’re

can make money but with VCS they’re usually really targeted so they want to

usually really targeted so they want to

usually really targeted so they want to see a tech company or they want to see a

see a tech company or they want to see a

see a tech company or they want to see a green company or whatever it is they

green company or whatever it is they

green company or whatever it is they have specific criteria that they’re

have specific criteria that they’re

have specific criteria that they’re looking for VCS are looking to make

looking for VCS are looking to make

looking for VCS are looking to make thirty percent a year return on their

thirty percent a year return on their

thirty percent a year return on their investment and it’s not going to come in

investment and it’s not going to come in

investment and it’s not going to come in the first year second year but by the

the first year second year but by the

the first year second year but by the time they exit after three to five years

time they exit after three to five years

time they exit after three to five years they want to see that made 30% per year

they want to see that made 30% per year

they want to see that made 30% per year on their investment so you have to have

on their investment so you have to have

on their investment so you have to have a type of company that will grow that

a type of company that will grow that

a type of company that will grow that quickly where angels they want to make

quickly where angels they want to make

quickly where angels they want to make money but it’s not as set right so they

money but it’s not as set right so they

money but it’s not as set right so they may invest in something that they

may invest in something that they

may invest in something that they believe in personally they have some

believe in personally they have some

believe in personally they have some kind of affinity with but it’s not going

kind of affinity with but it’s not going

kind of affinity with but it’s not going to yield as big a return because they

to yield as big a return because they

to yield as big a return because they like it and they’re okay with a lesser

like it and they’re okay with a lesser

like it and they’re okay with a lesser return maybe there’s more safety to it

return maybe there’s more safety to it

return maybe there’s more safety to it where VC wants to see massive rapid

where VC wants to see massive rapid

where VC wants to see massive rapid growth and so it lends itself to

growth and so it lends itself to

growth and so it lends itself to software companies to technology

software companies to technology

software companies to technology companies because it’s easier to scale

companies because it’s easier to scale

companies because it’s easier to scale those types of businesses if you look at

those types of businesses if you look at

those types of businesses if you look at a consulting business for example a VC

a consulting business for example a VC

a consulting business for example a VC wouldn’t touch that because it’s it’s

wouldn’t touch that because it’s it’s

wouldn’t touch that because it’s it’s too hard to scale quickly the returns

too hard to scale quickly the returns

too hard to scale quickly the returns aren’t there we’re an angel investor

aren’t there we’re an angel investor

aren’t there we’re an angel investor might invest in that kind of business

might invest in that kind of business

might invest in that kind of business because they see a way to make a little

because they see a way to make a little

because they see a way to make a little bit of money and they may believe

bit of money and they may believe

bit of money and they may believe strongly in what you’re doing so

strongly in what you’re doing so

strongly in what you’re doing so hopefully that helps with some of the

hopefully that helps with some of the

hopefully that helps with some of the main differences again when you are

main differences again when you are

main differences again when you are looking at raising funds I would start

looking at raising funds I would start

looking at raising funds I would start by thinking about how much money do you

by thinking about how much money do you

by thinking about how much money do you need and a half a million dollars a good

need and a half a million dollars a good

need and a half a million dollars a good mark if it’s less you’re looking at an

mark if it’s less you’re looking at an

mark if it’s less you’re looking at an angel that’s more you’re looking at

angel that’s more you’re looking at

angel that’s more you’re looking at Abby’s

Abby’s

Abby’s but really scrutinize the person that

but really scrutinize the person that

but really scrutinize the person that you’re bringing on because I know it’s

you’re bringing on because I know it’s

you’re bringing on because I know it’s exciting to get money right I know it’s

exciting to get money right I know it’s

exciting to get money right I know it’s exciting finally somebody believes in us

exciting finally somebody believes in us

exciting finally somebody believes in us finally we’re able to rapidly grow this

finally we’re able to rapidly grow this

finally we’re able to rapidly grow this thing up you know you’ve been struggling

thing up you know you’ve been struggling

thing up you know you’ve been struggling and grinding it out and and just making

and grinding it out and and just making

and grinding it out and and just making ends meet and not paying yourself very

ends meet and not paying yourself very

ends meet and not paying yourself very well and finally somebody believes in

well and finally somebody believes in

well and finally somebody believes in you and there’s so much excitement

you and there’s so much excitement

you and there’s so much excitement around that but it’s easy to get locked

around that but it’s easy to get locked

around that but it’s easy to get locked into a bad deal everybody’s on their

into a bad deal everybody’s on their

into a bad deal everybody’s on their best behavior when things are going well

best behavior when things are going well

best behavior when things are going well especially at the beginning but when

especially at the beginning but when

especially at the beginning but when things get rough which they’re gonna get

things get rough which they’re gonna get

things get rough which they’re gonna get rough with your business you need to

rough with your business you need to

rough with your business you need to have somebody there who will still

have somebody there who will still

have somebody there who will still support you who will really still

support you who will really still

support you who will really still believe in what you’re trying to do with

believe in what you’re trying to do with

believe in what you’re trying to do with your business and so I just urge you to

your business and so I just urge you to

your business and so I just urge you to scrutinize strongly everybody that

scrutinize strongly everybody that

scrutinize strongly everybody that you’re bringing on as a potential

you’re bringing on as a potential

you’re bringing on as a potential partner or investor into your business

partner or investor into your business

partner or investor into your business because if you do make the wrong

because if you do make the wrong

because if you do make the wrong decision that could really sink your

decision that could really sink your

decision that could really sink your company they need to be bringing more to

company they need to be bringing more to

company they need to be bringing more to the table than just money

the table than just money

the table than just money they need to belief in your business and

they need to belief in your business and

they need to belief in your business and they need to have some kind of expertise

they need to have some kind of expertise

they need to have some kind of expertise that they can share or contacts

that they can share or contacts

that they can share or contacts experience something that helps your

experience something that helps your

experience something that helps your business go beyond just the money great

business go beyond just the money great

business go beyond just the money great question I hope that helped for those of

question I hope that helped for those of

question I hope that helped for those of you watching you like the video please

you watching you like the video please

you watching you like the video please give it a thumbs up below it always

give it a thumbs up below it always

give it a thumbs up below it always makes me want to do more for you guys

makes me want to do more for you guys

makes me want to do more for you guys and I love the Hurriyet to think please

and I love the Hurriyet to think please

and I love the Hurriyet to think please leave a comment underneath let me know

leave a comment underneath let me know

leave a comment underneath let me know what you’re thinking about this video

what you’re thinking about this video

what you’re thinking about this video and if you want me to do a video

and if you want me to do a video

and if you want me to do a video response for you you have a business

response for you you have a business

response for you you have a business problem leave it below I’ll create the

problem leave it below I’ll create the

problem leave it below I’ll create the video thank you guys I’ll see you soon

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