Final answer:
Venture capital funds and business angels are both types of investors who provide financial support to startups, but they differ in their structure, sources of funds, and investment approaches.
Step-by-step explanation:
Venture capital funds and business angels are both types of investors who provide financial support to startups, but there are some key differences between them:
Venture capital funds: These are firms that gather money from various investors and then invest that money in a portfolio of startups. They not only provide funding but also offer advice on products, customers, and key employees. Returns for investors in a venture capital fund are based on how the fund as a whole performs.
Business angels: These are individual investors who use their own money to invest in startups. They typically invest in smaller amounts compared to venture capital funds and often have a more hands-on approach. Business angels may also provide advice and mentorship to the startups they invest in.
Both venture capital funds and business angels play an important role in supporting new companies, but their structures, sources of funds, and investment approaches distinguish them from each other.