Angel vs Venture Capital funding – which suits you best?

by Startacus Admin

Ofri Ben-Porat is CEO and co-founder of mar-tech startup Pixoneye – an advanced computer vision and AI technology delivered on device that offers in app content personalisation for brands. Here, Ofi writes for Startacus on the measured approach Pixoneye took when looking at Angel or VC funding.

"I think I can safely assume that everyone visiting Startacus will be involved in at least one startup, and as co-founder and CEO of one, Pixoneye, I thought it might be useful to share my insight into what we’re surely all searching and wishing for – funding! But it’s not always as simple as we’d like it to be. Let’s face it, it’s not every day someone comes along and offers us a shiny bag of coins.

Yet too often I’ve seen startups accept the wrong type of funding, often hindering or causing irreparable damage to its long-term prospects. So which type of investment suits you best?

Angel investors invest based on emotion. They’re looking for passion projects, and want to be as excited about your business as you are. They want to trust your team and product. The ideal angel investor behaves like a mentor. They can advise you, introduce you to their contacts and give their own insight about your industry. It’s not just a financial investment – you’re tapping into their expert knowledge.

On the other hand, Venture Capital funders have to invest on behalf of clients – and deal with all the pressure that comes with. While they’re putting faith in your product or service, there is far bigger burden to scale and return on investment as soon as possible.

For startups like ours which can’t survive on a bootstrap budget, funding needs to be very considered. It often works best with a close collaborative relationship, with investors aligning to the same vision and idea of outcome.

When we got to a great stage of our journey, with two offices, three rounds of funding, a fully functioning product and R&D team, we were expected to go for VC funding. However, we decided to continue with angel investors as we felt they’d have patience with more realistic expectations as to when they’d see returns. We also really feel we part of each other’s success; not just another company in a wide portfolio. 

If you’re ready for rapid expansion, you have your product and message nailed, and are ready to scale, perhaps VCs are the best option for you. You’ll more likely see the deeper pockets you need. However, don’t chase this from the beginning. Do your research to find which angel investors can provide you the best mentorship, while allowing you to give your business the attention and patience it needs to grow and flourish."

Ofri Ben-Porat is CEO and co-founder of mar-tech startup Pixoneye – an advanced computer vision and AI technology delivered on device that offers in app content personalisation for brands. Ofri also consults for Waze and served as senior marketing advisor to the minister of tourism in Israel prior to launching the company. Pixoneye has recently been shortlisted for start-up of the year for the 2017 BIMA Awards and has been featured in Marketing Week’s 100 most disruptive brands list.

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Published on: 16th August 2017