Buzzword Buster – Venture Capital

In its broadest sense, a lump of cash which is given to a firm in its early days to allow it to grow, in return for a stake in the company. More specifically, people often refer to Venture Capitalists and Venture Capital firms (or VCs). Venture capital firms usually have a particular remit (i.e. fintech firms, health tech firms, early stage, late stage, etc.).
The idea of a stand-alone venture capital firm which makes money by investing in a portfolio of early stage businesses has been around for many years. In principle, these firms invest in a range of businesses on the assumption that while some will fail, enough will succeed to make the overall venture successful.

More recently, venture capital arms of established businesses have become popular (like banks and insurance companies). These firms have a slightly different remit. They are tasked with finding businesses to invest in which will grow and provide a return on their investment, but also will potentially provide new propositions and solutions for the wider group business. These functions sit between true venture capital businesses, and innovation functions which are focussed on partnerships as a way for start-ups to secure funding and support.

Some VC firms have acquired a reputation for going from friendly business buddies to aggressive (and even litigious) combatants in very short order when a company’s growth projections don’t materialise.

Disagree or want to add something? What does Venture Capital mean to you?

Buzzword Buster – Angel Investor

Angel investors are individuals who provide much needed cash for early stage start-ups. While there are no hard and fast rules, typically angel investors provide substantial capital injections to early funding rounds, after founders have exhausted their own funds. They may also do this via private arrangement prior to formal funding rounds.

In return for providing capital to largely untested (and even unestablished) businesses, angel investors usually gain significant chunks of equity. Founders who are only interested in the funds provided by these individuals are usually missing a trick, because often the greatest benefit an angel investor can provide to a small business is the insight and experience they have gained from their often extensive career.

The name, quite obviously, comes from the idea that these investors are guardian angels selflessly defending the growth and prospects of start-ups against the varied corporate interests which surround them. While not intentional, the name is particularly apt as these people typically have a direct line to the gods of start-ups everywhere, the VC firms and scale enterprises which can make or break you.

Disagree or want to add something? What does Angel Investor mean to you?