What Are The Different Types Of Investors?

What Are The Different Types Of Investors?

1 Answer

  1. The people who fund a business idea are known as investors.
    Investors can be classified into following types:
    1. Family and friends: They are generally 1st investors in your business idea. They may invest in your idea solely because of their belief in your vision which can be a great confidence booster for you.
    2. Banks & Financial Institutions: Entrepreneurs go to banks for debt funding. Debt funding over investor funding makes sure that the decision making power stays with the founders and is ownership is not diluted.
    3. Government: The Government of many countries provides grants to startups that come up with disrupting ideas.
    4. Angel Investors: Angel investors mostly invest in the initial phase of startups for some equity in return. They are also known as seed funders.
    5. Incubators and Accelerators: These are institutions that prepare you to effectively lead your company by helping you with infrastructure, funding, etc.
    6. Fellowships: Many fellowships and awards are provided to grow your business idea.
    7. Venture Capitalists: These are firms that invest in startups for a share of equity in return. They also guidance to the entrepreneurs to grow their business.
    8. Crowdfunding: It is a concept of raising funds through crowdfunding websites where you present your idea and investors invest in return for some rewards or equity or just because they believe in your cause.
    9. Crowdlending: It is practice of getting loans from individuals through online platforms.
    10. Corporate Investors: These are incorporated companies that invest in other companies in return for equity.

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