A new venture is like a new dream. The only thing that sets it apart is that turning it into reality comes at a cost. Starting a new company or business requires a blueprint, along with human virtues like patience and confidence, but it also requires capital.
Raising capital is key to the establishment of a business. If the person is from an affluent background or does not lack money, then the obvious source of funding will be self-funding.
Another source of funding, if one does not have the capacity to invest, is approaching venture capitalists. These are basically investors who invest in small businesses and start-ups that do not have the capacity to procure debt or public funding.
Venture capitalists are at the risk of losing if the business fails, but they are usually wealthy investors who can tolerate the loss. In addition, they are usually experienced professionals who invest in a firm after a deep study on the promising aspects of the venture and the scope it offers.
On the other hand, success would mean massive returns for these investors. Venture capitalists also get an ownership in the company and influence its direction.
Angel investors, on the contrary, work in a different way. Being former entrepreneurs, they like to work with small businesses and help the venture during initial stages and during distress. Unlike venture capitalists, they do not seek ownership in the company or massive returns. Angel investors are found usually amongst one’s industrial or academic networks, even within family and friends.