Lao Li shares: Angel Investment vs. venture capital vs. private equity financing

Angel Investment (Angel capital)

• Creative phase (idea stage) to seed phase (seed stage)
• 0–1 million dollar turnover
• Not profitable yet.
• Small shareholder
• The high risk anomaly
• There is no debt situation

Risk Investment (Venture capital)

• Early stages (early stage) to the development stage (growth stage)
• Turnover of more than $1 million
• No profit
• Small shareholder
• The stakes are high.
• General Liability situation

Private Equity Financing (private Equity)

• Development stage (growth stage)
• Turnover of more than $20 million
• At least $5 million in earnings
• Major shareholder
• Moderate risk
• Very high debt rate.

So, in my opinion, the angel investor in front of me is actually looking for the angel wheel financing of the start-up enterprise in the seed period. There is a very big difference between Angel Investment, venture capital, and private equity financing, and the purpose of their existence varies.

At the same time, I would like to talk to you about how a start-up company often is and how the corresponding turnover looks like:

• Creative Phase (Idea Stage): No turnover, no products out, some cavity enthusiasm and creativity
• seed Stage (Seed stage): Turnover not exceeding US $1 million (usually no more than $100,000), product is in working condition, in early product/market matching (product/market fit) stage
• early Stage (Early Stage): A stable turnover of around $1 million to $5 million, with a reusable user acquisition process.
• Development Phase (Growth Stage): With more than 5 million turnover, has a good team, is expanding from different aspects

Lao Li shares: Angel Investment vs. venture capital vs. private equity financing