How do angel investors differ from venture capitalists?

Angel investors are individual investors who provide early-stage capital, while venture capitalists are firms that invest other people's money in businesses.

Angel investors are typically high-net-worth individuals who invest their own personal funds into a start-up or early-stage company in exchange for an equity share. They often provide the first round of 'seed' funding for a business, and their investment can range from a few thousand to a few million pounds. Angel investors often invest based on their personal judgement and may offer mentorship or advice alongside their investment. They are usually willing to accept higher risks for potentially higher returns, and their investment decisions can be influenced by personal interest or passion for the business idea.

Venture capitalists, on the other hand, are professional investment firms that manage pooled funds from multiple investors. They typically invest in businesses that are beyond the start-up phase and have a proven track record of growth. Venture capitalists invest larger amounts of money, often in the millions, and in return, they expect a significant portion of equity and often a degree of control in the company. They follow a more structured and rigorous investment process, with a focus on financial returns and exit strategies.

In summary, while both angel investors and venture capitalists provide crucial funding for businesses, they differ in terms of the source of funds, the stage of investment, the amount of money invested, and their involvement in the business. Angel investors are individual investors who use their own money and often invest at an earlier stage, while venture capitalists are firms that use pooled funds and typically invest at a later stage.