A venture capitalist is a person who invests in a business venture, providing capital for start-up or expansion. Venture capitalists are looking for a higher rate of return than would be given by more traditional investments.
Generally, venture capitalists are looking for returns of 25 percent and up.
What's the difference between a venture capitalist and an angel investor?
A venture capitalist is a professional investor. He or she manages a fund and is looking for suitable investments for that fund. An angel investor is an individual who, while also looking for a suitable investment, is also looking for a personal opportunity.
In other words, the venture capitalist may have no business experience applicable to the industry your company is involved in, and is focused on the potential rate of return your company can provide. An angel investor often has business experience relevant to your company and is interested in adding value to your company, as well as making a return.
Despite of those differences, these two kinds of raising capital have some common pros and cons:
Business Consultations – You can be provided some useful advises through start up process. This can help a start up firm avoid many of the difficulties that are often associated with start-up business ventures.
Management Consultations - Unfortunately, not all entrepreneurs are good business managers. So the venture capitalist likely will have a say in how your business is managed. For the non-management expert, this can be a significant benefit.
Human Resources - In terms of finding the best talent for start up firms, venture capitalist often provide consultants who are specialists in hiring. This can help a start up firm avoid the mistake of hiring the wrong people for their company.
Additional Resources - Starting a new business is complicated with many problems like legal matters, or tax issues… It is usual for a venture capital firm to take an interest in providing these...