Answer :
Final answer:
The main distinction between angels and VCs lies in the due diligence process and their understanding of a company's business model. Angels rely on informal due diligence while VCs require a comprehensive understanding of a company's value creation method.
Explanation:
The main difference between angels and VCs lies in their due diligence process and their understanding of how a company functions. Angels, or angel investors, usually conduct informal due diligence due to their typically smaller size and less formal structure. They may rely on personal connections, past experiences, or intuitive sense when choosing to invest in a business.
On the other hand, VCs, or venture capitalists, often employ a more formal due diligence process. They require detailed information about a company's business model, its strategy for creating, delivering, and extracting value, its financial prospects, etc., to make well-informed investment decisions. Hence, understanding the business framework is more essential for VCs compared to angels.
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