Types Of Investors For Startups To Consider



We are all aware of the basics about investors, they invest money. But in this process of becoming an investor, there is much more than just selecting the business and putting money into it. For being an investor, you must be aware of the different types of investors so that you can choose for yourself which way you would like to invest your money in. Similarly, if you are looking for an investor for your business, you must know which direction you need to go for meeting your requirements. So, to become an equity investor in Texas here is your guide to the main five types of investors.

  • Banks

    The most basic source of investment for a new business is getting a business loan. So, banks are the first type of investors, perfect for the initial startup businesses. The owner(s) of the business has to prove that he is financially responsible and has to provide a collateral along with a perfectly lengthy business plan which includes a detailed description of the business and its core products or services, financial and management projections and plans for the goal implementation. Even after all these preparations, it may be rejected by the bank. Thus, strengthening the role of other investors in the business.

  • Angel investors
    Angel investors are usually individuals whose net worth exceeds $1 million. They profit from their wealth by investing it in business. Especially those startups which are having a problem getting funds in a traditional way. They usually invest in projects of their interest and may sometimes act as advisors or mentors for them. They are most active when the economy is stable.

  • Peer-to-peer lenders
    They are usually individuals or small groups who are registered with funding websites like Prosper and Lenders Club. They apply for such websites. Once their application is approved, they decide the types and area of business they are interested in investing and get the results accordingly. There are state regulations about peer-to-peer lendings that the companies and investors must be aware with.

  • Venture capitalists
    Venture capital investor Texas also invest large amounts of money in businesses. The only difference between them and angel investors is that they invest the money of their employer whereas angel investors invest money of their own. They are most likely not to invest as soon as they perceive a business as risky. Venture capital funds Texas benefit by getting a higher rate of interest than a traditional loan.

  • Personal investors
    It is a common process to ask for financial help from family and relatives to set up a business. Those relatives who fund you for your business come under personal investors. However, there are legal limitations regarding the number of people that can invest and proper documentation is required.


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