subject: Raising Money – Venture Capital Vs Angels Investment [print this page] Contrary to what you see in the press with the credit crisis and looming recession, there is simply too much money in the world at the moment, too much capital seeking too few investment opportunities. Remember, depression of the 1930s created more millionaires than at any other time (always), and now it is no different. A large proportion of high net worth individuals are striving to diversify their portfolios away from traditional investments as a defensive hedge against the stock marketVolatility. Have outperformed historically and in times of recession, the top two asset classes that the traditional markets have been commodities and private equity. So if there is so much capital in the world today, why is it so difficult to find, you need the capital?
The most likely answer to your question is, are you in that the amounts are too small to try to venture capitalists and hedge-fund manager. Finally, it is relative. When a VC has dozens Millions of pounds in private equity investing, why invest in 100 or 200 start-up company? Who can manage and see all these investments and entrepreneurs? Its hard enough to find the management sometimes! So in relative terms, investment in which you do not prove the most likely for cost reasons for them, though probably they would get more value overall.
Venture capital firms are a way to bring about a serious amountDas Kapital, but as you imagine, there are pitfalls. The fact is essentially the loss of equity well above the 51% mark. Further the final vote on "the right to sell" is likely to include a legally binding for them. Since VCS is the main reason "ROISAP '(return on investment as quickly as possible) VCs will always be a desperate desire to reflect each transaction as quickly as possible. And they will not care where the return comes to himself or an outside party, when they receive a massive bonusfor risk and skills for what they have invested.
More appealing to a start-up entrepreneurs is to establish a business angel investor in the line of work, looking interested in participating, since they will either take an equity position, and (some measure of guilt or as a rule combination of the two) in exchange for their investments. They will also monitor a place on the board of directors, who use them as a platform for their investment and give valuable advice. Sometimes they arecan actually commenced an active role in the organization and get it kick into high gear. This freedom can set a company's ability to rapidly develop key employees and the business model to the point where it is prepared on a larger scale, the second round of funding are looking at a much lower cost make-to-equity by the proven track record within the organization.
