Angel Investing and Venture Capital

Angel Investing and Venture Capital

You are my angel – Massive Attack

As the name implies, angel investors help start-up businesses providing initial financial capital. Hence, angel investors, also called business angels, invest into start-ups, usually in exchange of debt or equity. Historically, the term “Angel” came from Broadway, where affluent or wealthy individuals sponsored theatrical plays. Professor William Wetzel from the University of New Hampshire was the first to use the expression.

Interestingly, many angel investors are entrepreneurs or executives who have retired, but support firms for other reasons than purely monetary ones. Also, future entrepreneurs often meet angel investors at investor conferences and symposia. Moreover, angel investors often form groups to facilitate due diligence and to pool investment capital into one investment vehicle. Further, in the United States of America, the Center for Venture Research keeps track of how many active angel investors there are in any particular year.

Listen what the crystal ball say – ASAP Rocky. Image: Elena

Alternatively, venture capital is another type of investing for start-ups. Venture capital is start-up capital usually given to high potential, high-tech companies, such as in the biomedical engineering field. Along these lines, the venture funds earn equity capital to venture capital investors because they now own part of the company invested in. Many people want to be venture capitalists, a dream or desire only normal given that it is safe to say that most people want to be rich or richer. In Canada, venture capital is not necessarily obtained from individuals, but also from grant distributing companies such as the BDC (Business Development Bank of Canada).

Indeed, the BDC represents a major venture capital investor in Canada. Moreover, venture capitalists take significant risks by investing in companies which often do not qualify for bank loans, but they also gain the advantage of owning a fundamental part of the company. Moreover, venture capital corresponds to private equity. Further, a venture capitalist is a person who makes venture investments. However, such persons also help companies in other ways, such as by bringing their managerial or technological expertise. A venture capital fund refers to a pooled investment vehicle.