What factors contribute to angel investors conducting less thorough due diligence on digital currency compared to VCs?

5 answers

• Jan 13, 2022 · 3 years ago
  One possible reason is that angel investors often have limited resources and time compared to venture capitalists. They may not have the same level of expertise or access to information as VCs, which can lead to less thorough due diligence on digital currency investments. Additionally, angel investors may be more focused on early-stage startups and the potential for high returns, rather than conducting extensive research on the underlying technology or market conditions.
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• Jan 13, 2022 · 3 years ago
  Another factor could be the perceived risk associated with digital currency investments. Angel investors may view digital currency as a more volatile and uncertain asset class compared to traditional investments. This perception of higher risk may lead to a less thorough due diligence process, as they may be more willing to take on higher risks in exchange for the potential for higher returns.
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• Jan 13, 2022 · 3 years ago
  From BYDFi's perspective, angel investors may conduct less thorough due diligence on digital currency due to the fast-paced nature of the industry. Digital currency markets can be highly volatile and subject to rapid changes. Angel investors may feel the need to make quick investment decisions to capitalize on opportunities, which can result in less comprehensive due diligence compared to VCs who have more resources and a longer-term investment horizon.
  457115
• Jan 13, 2022 · 3 years ago
  In addition, the lack of regulatory oversight and standardized due diligence practices in the digital currency space may contribute to angel investors conducting less thorough due diligence. Unlike traditional investments, digital currency investments are often not subject to the same level of regulatory scrutiny, which can make it more challenging for angel investors to assess the risks and potential returns accurately.
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• Jan 13, 2022 · 3 years ago
  Furthermore, angel investors may rely more on personal connections and relationships when making investment decisions. They may prioritize investing in projects recommended by trusted individuals in their network, rather than conducting extensive due diligence on the digital currency itself. This reliance on personal connections can result in less thorough due diligence compared to VCs who may have a more systematic approach to evaluating investment opportunities.
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