Angel Investing Business Entrepreneurship Investing InvestStream Video Startups Venture Capital

What is the Difference Between Venture Capitalists and Angel Investors?

What is the difference between venture capitalists and angel investors? In this episode of InvestStream, I discuss the difference between these two types of startup investors. Knowing the difference can be very useful in understanding a particular investor’s motivation for investing or not investing in a startup.

Advice Angel Investing Business Entrepreneurship InvestStream Video Startups Venture Capital

What makes a startup venture fundable?

There are a multitude of things that help make #startups attractive to #angel #investors & #venturecapitalists. In this video, I shared 3 things that I think are critical to a startup being venture fundable.

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There are a few things that should be on the checklist of any startup before they think of approaching investors other than friends and family.

  1. The first is TAM or “Total Addressable Market”. VCs need big markets to support big companies. A better understanding of VC economics would help explain this a bit better but for the moment, just assume that VCs need big exits otherwise they go out of business. Big exits are usually via IPOs. Rarely does the NYSE or Nasdaq allow listing a company under a $1 billion market cap. In order for a company to list for on a public exchange for a billion dollars, they really need a few hundred million in revenue and lots of growth prospects otherwise, public investors won’t buy into the IPO. After years of rapidly increasing valuations in the space, we’re starting to see some strain in the ride-sharing space after Lyft and Uber’s IPOs. Even Slack has struggled after going public. Unless the market that a startup is targeting is a multi-billion dollar market or growing rapidly, it’s very difficult to convince most VCs to invest.
  2. The quality of the team is critical to the success of a startup and its execution. If the team is solid, investors are more likely to get excited about investing.
  3. Finally, there’s traction. Having traction is critical to an early stage startup looking attractive to angels and VCs. If the traction is strong and there’s a well understood growth plan, investors are more confident that the team can attack the large total addressable market.


Lean Startup Presentation

This is a nice presentation on the need for startups to be lean and how agile development can help the process. It would have been nice to have audio to go along with the presentation by Steve Blank (Board Member) and Eric Ries (Co-founder and Board Observer) of IMVU.

IMVU was founded in 2004 and is doing roughly $1 million per month in revenue. IMVU is a 3D chat service where you can pick and choose your own avatar and much like SecondLife, you can purchase items in the virtual world, using real world currency to buy in-world credits. I haven’t used IMVU but users can create items in-world that can be sold to other users for credits.