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What is a Startup Investor?

There are different types of startup investors. These include:

Friends & Family

Many startup founders raise money from their friends and family to get their company off the ground. These can be great for long-term investments as they are more driven by support and loyalty for the entrepreneur as opposed to return on investment purposes. Although these kinds of investments are seen as less formal, it is still important that they are properly documented so that everybody is clear regarding risks and processes and ties are not severed.

Angel Investors

Angels are individuals with a high net-worth who directly invests their money into innovative business that they believe have high potential. A lot of angels are successful business people or entrepreneurs themselves, and so they are able to provide valuable insight, advice, and a strong professional network to the entrepreneur in which they have invested. They can also help the entrepreneur to grow reputation and credibility in their sector.

Angel Groups

These are angels that have formed groups in order to pool bigger investments and evaluate potential investments together.

Venture Capitalists

Venture Capitalists invest the most money out of all of the groups. They review, assess, and invest in upcoming businesses, but can be very selective. VC’s only invest in 1 out of every 100 businesses in comparison to angels who invest in 1 out of every 10. VC’s spend a lot more time on due diligence, spending a lot of time evaluating each investment. VCs are very active when it comes to their investments. They act as advisors who seek to add value to the business as well as investment. Generally the VCs will require a seat on your company’s board of directors.

Customers

This refers to crowdfunding. This is a method of gathering money from your personal and professional networks. Social media plays a huge role in this fundraising strategy, where wide sharing and reach is the objective.

Why Do People Invest In Startups?

1. Generating Return on Investment
2. Portfolio Diversification
3. The desire to be involved in positive change and innovative solutions

There are many platforms dedicated to startup investing, for example:

• Microventures

• WeFunder

• Seedrs.com

If you’d like to read more on startup investment, visit:

How to Invest in Startups and Make Money

Types of Investors

What is Crwodfunding?