Investors and their types
Investors are the ones who usually put their money in something which will make them earn more and more money. But, the investors should have the potential to accept both the profits and the losses. The investment market is based primarily on the source of the investors. There are many types of investors and let us take a closer look at those types in this article.
- Angel investors
- Peer-to-peer lenders
- Venture capitalists
- Personal investors
Generally, the funds from these investors will be used to expand the operations of the company, introduce a fresh product in the market and upgrading the equipment in the company.
Every people will go and seek some loans in the banks to start a new own business. But getting a loan from a bank is not an easy thing, it has many steps and rules to follow. It will definitely give the people a great experience and a lesson to know about the industry. What a bank wants from the people is given below.
- A description of their business projects
- Financial needs for their business
- A strategy or plan to yield success in the business
- A detailed description of the business
- Management projections
When we go for a loan, we have to show and prove to them that we are financially responsible to repay the loan amount we are getting from the banks. So, the bank will require some surety signatures from some people. There are some loans available only for business startups.
- 7(a) program
- Microloan program
- 504 loan program
Angel investors are the investors who will give the money mainly to the business startups to increase their wealth. Most of the angel investors are successful entrepreneurs and business professionals with much experience. The investment may be of a loan or purchase of stocks.
In this type, the lenders and the investors should create an online profile to showcase their projects. The lenders will ask us to take some steps and prove ourselves for the approval of a loan to start up a business.
They will invest some bulk amount by securing a share for the company, which is called equity capital. When the equity capital increases, then it will be assumed that there will be a profit wealth in the business.
Personal investors are usually governed by a contract and this is just to avoid the high risks. This is just like getting some amount from our friends or family members. So, the business will never separate our relationships personally. So, we should be very careful about that.