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Types of InvestorsAngel Investors
Angel investors provide financial support to local & regional entrepreneurs with early stage start-up companies. They provide capital to companies in various start-up stages as seed funding and often serve as a hands-on advisory resource to support the companyâ€™s initial development. Angel groups typically provide capital in exchange for convertible debt or ownership equity. While angels usually do not take part in company decisions, many try to employ their experience to coach the entrepreneurs with whom they invest. Angel investments in any one venture typically range from $250,000 to $2,000,000 million although exceptions occur at both ends of that range.
Venture Capitalists provide capital to regional & national companies that have already completed the seed-funding phase in return for ownership equity. They provide capital to early-stage, high-potential growth companies that have working prototypes for a product, service, or process that is in or close to commercialization. As opposed to angel investors, venture capitalists tend to have a significant portion of company ownership and often voting control, and they can exercise significant control over company management. Venture capitalists generally favor investing in disruptive technology ventures for the investment potential in terms the dollar return and the short time from commercialization to exit opportunities. Venture Capitalists usually provide funding between $4 million to $20 million
Crowd funding or crowd financing is the collective action of individuals, typically using the internet, to fund and support ventures or activities initiated by other individuals and organizations. Crowd funding is used to support a variety of activities such as disaster relief, free software development, scientific research, raising donations, supporting artists, and startup company funding. Types of crowd funding include equity capital investment, credit extensions, reward-based, and donation-based funding. Crowd funding has received a great deal of attention recently.
Table below shows the types of crowd funding;
|Equity-Based||Includes revenue and profit sharing models||For financial return|
|Lending-Based||P2P lending, P2B lending and social lending||For financial return|
|Reward-Based||For non-monetary rewards|
|Donation-Based||For philanthropy or sponsorship|
Friends & Family
These are the people who believe in you and your personal success. Because of their relationship, these individuals may be more willing to invest your ideas. Friends and relatives may want to support and encourage your ideas both emotionally and monetarily. There is no set structure for financing involving friends and family, but you should insist that the terms and conditions for the investment of money are very clear, concise, and mutually agreed upon before accepting and employing the funds.