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