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
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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
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