Clueless: Intro to Angel Investing and Venture Capital
So I just watched Dr Ola Brown’s YouTube video on Angel Investing and Venture Capital. Dr Ola Brown is a UK-trained medical doctor who is into economics, funding, investing, etc.
She owns a healthcare VC company or and they invest in companies that are into healthcare and fintech. Recently, she was kind enough to share with us (the general public) A 10 video part series of what angel investing is and what venture capital is.
I have an academic background in nursing, so she inspires me and continues to confirm to me that nothing is impossible. You can be a nurse and an investor.
Gone are the days when you had to be stuck with what you studied in school. God, I hate the idea of being a nurse only when I know I can be so much more.
She is a medical doctor, and now she’s into all these investments and all this cool stuff. And I am like yeah if she can, then I can too.
I am going to be talking about what I learned, which will serve as a repository of what I will be learning on my money-making journey. I also intend to turn this into a YouTube video, so feel free to support my youtube channel.
Today is the first day, and we learned about angel investing and venture capital. Before now, I didn’t know what those terms meant. After watching the video, I did some research to understand angel investing better. That way, it sticks harder to my brain.
From what I understood, angel investing and venture capital are like a spectrum, just like Autism, for those of us that are medically inclined.
On one end, we have angel investors, which are people that invest their own money into other people’s businesses.
It doesn’t matter the amount. It could range from 50,000 Naira to a million naira.
So when you take a loan from your mother to invest in your business, your mother is technically, literally, and figuratively an angel investor in your business. When you take a loan from your friends to invest in your business. They are angel investors.
Angel investors are people who are looking to diversify their portfolios. They want to take a higher risk, and higher risk equals higher returns. Sometimes you win, sometimes you lose. There is a probability that the business you invest in won’t make it.
While on the other end of the spectrum are VCs, aka the Venture Capital folks, who take money from different sources like banks, pensions agencies, and anywhere they can source money from. They make a deal with these people and say something like:
I am going to manage this money for you and in return you are going to pay me at management fee. And at the end of the so-so and so period, typically five years, this is the amount of money I will give back to you. And if I exceed this amount of money in profit, we are going to share the excess in a certain percentage.
As I said, it is a spectrum. Within that spectrum, we have, on the one hand, the angel investors and, on the other end, venture capitalists. In between, there are a lot of things that go on. From this explanation, you can tell that venture capitals are typically bigger than angel investors. As they invest more money. We’re talking about money to the tune of millions of naira.
But angel investors have the liberty to invest any amount of money, no matter how small. However, there are instances where angel investors are bigger than venture capital. In this case, they are called super angel investors, who have too much money to invest.
For instance, if Bill Gates decides to invest in NKEM, he will be a super angel investor because he won’t be investing small money.
So when you take money from anybody who decides to invest in your business, be it your classmates, lecturer, employee, colleague, family, etc., they are typically angel investors.
I believe I have been able to state the difference. But for a recap, these are the difference between angel investors and venture capitalists.
ANGEL INVESTORS:
• They are people who invest their money into businesses.
• They do little to no due diligence. Somebody can invest in your business because they like you or because they are family, but that is not usually done in business. You need to do your due diligence. Take into consideration the viability of that business.
• They typically invest little to huge amounts of money.
• They don’t get paid for investing.
I remember, as a student, I borrowed 30,000 naira from a classmate to fund my online fashion business, and the business failed, but thankfully I was able to pay her back. If you look at it in a way, she was an Angel investor as we agreed on a particular interest at the end of 3 months or so.
VENTURE CAPITAL:
• They do their due diligence.
• They don’t invest their own money. They invest other people’s money.
• They invest huge amounts of money.
• They get paid management fees.
So this is a recap of what I learned today. I’ll keep making videos and blog posts on things I’ve learned. I don’t know what I’m doing. I’m just going by what the voice in my head and my intuition are saying.
So yeah, thank you. I hope you enjoyed this blog post. And please subscribe to my Youtube Channel.
See you later.
