Small business owners and possible small business owners are lucky because the windows of funds/ finances are opening up for them on a daily basis – provided they (small business owners) meet up with the stringent requirements of the business enterprise capitalists and business angels.
Venture capitalist in most country is a limited partnership formed by rich investors. They operate more like a co-operative society where every member signs to make an initial investment/ contribution then followed by a series of additional investment to the tune of maximum allowed contribution by a single partner (this is often enshrined in the partnership agreement). A general partner known as the venture capitalist is typically appointed and saddled with the responsibility of producing investment and investment decision. Carried-interest is the phrase used to describe the extra incentives that the general partner gets together with a yearly management fee.
The aim of seeking finance at this point is to attain increased sales so as to breakeven, assuming the business has not done so yet.
Business angels are rich individuals that finance establishes businesses. It is the responsibility of Business angels to carryout due diligence on small businesses before furnishing them with finances and fund and after that monitor them.
The difference between a business angel and venture capitalist is that; while a business angel is an individual, venture capitalist is the representative of wealthy individuals. Most seed money and startups are originally offered by business angels before involving venture capitalists when they find themselves in tight corners. Business angels normally have close ties with VCs.