Venture capitalists (VCs) and angel investors both play critical roles in the funding landscape of startups, but they typically engage at different stages and in different capacities.
VCs often invest in startups during later stages, like during Series A funding and beyond. They typically invest larger sums of money and, in return, expect equity in the company. Venture Capital firms often have funds that represent various investors, and they seek high growth and high return on their investment. In the context of incubators and accelerators, VCs may serve as mentors, provide strategic advice, or participate in demo days as potential investors.
Angel Investors, on the other hand, are typically high-net-worth individuals who invest their personal funds into early-stage startups, often during the seed stage. They may provide more favorable terms for startups compared to VCs as they are investing their own money and can make independent decisions. Angel investors often provide mentorship to startups and can be a valuable source of early funding for companies in incubators or accelerators.
It's important to note that while both can provide crucial capital, they also often bring industry knowledge, connections, and mentorship that can be instrumental to a startup's success.