Angel Investors vs. VC Firms

      Angel investors are wealthy individuals or groups of individuals who invest their own money into start-up companies in exchange for equity or convertible debt (debt convertible into stock). To be an angel investor, a person doesn't have to be an accredited investor by the SEC, who have to have a net worth of over $1 million (not including the value of their residence) or have made over $200,000 (if single, $300,000 if married) for the last 2 years and expect to make that much again. In investing in companies, angel investors take on a lot of risk putting their money in while founders take on relatively little because if the company fails, the angel investors typically don't have to be paid back. However, by putting their money in, it also means they have a degree of control over the company meaning they can offer their advice on how best to help the company succeed, but they can also try to take things in a different way than the founder may prefer.
        Venture capitalist firms is a form of financing in which the firm collects a large pool of money from investors and use that money to invest in start-ups and small businesses that are high risk, but with large exponential growth potential. The high growth potential means that if they are right on just one company, they will make enough to cover the losses of the other investments and make a large profit. Venture capitalist firms can put huge sums of money into companies to help them grow rapidly without an obligation to pay them back. However, venture capital firms expect a return on their investment so they expect the company to eventually undergo an IPO or acquisition so they can cash out.