One minute to read: Angel Investment vs. venture capital vs. private equity financing

Editor's note: Before the Netizen "dream back to the Tang Dynasty" in my Techgogogo public message said, can provide an article simple to distinguish between Angel Investment (Angel), Venture capital (VC), and private equity investment (PE), and a start-up enterprises in several major stages, It complains that domestic introductions are either too lengthy or lied. Here are some insights from senior overseas investor David Cummings, who are confident enough to concise.

In a conversation last week with an angel investor who had been investing in a number of creative startups, he said he was also very interested in small private equity financing (PE). This intrigued me, and I asked him what he would probably look like in a small private equity firm. He replied that it was probably the start-up that went to about $500,000 in turnover. Well, at this point I realized that we were not talking about the same thing.

In my opinion, the difference between the various investments should look like this:

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

Note: More articles please pay attention to the public number: Techgogogo or personal blog http://techgogogo.com. Of course, you are also very welcome to pick up directly (ZHUBAITIAN1). The English version of this article is from David Cummings's blog, the Chinese translation of which is provided by Heaven Zhuhai.

One minute to read: Angel Investment vs. venture capital vs. private equity financing