At first glance, startup investors may all seem similar. Understanding the different types of startup investor will help you understand the startup investing landscape. There are several main categories of investor that participate in early-state finance.
Customers include both existing and prospective users of the startup’s product or service. These investors tend to have strong pre-existing knowledge of the startup and its product or service, and their close connection with the business can make them fans, advocates, and brand ambassadors.
Successful professionals in a range of industries may choose to start investing in early-stage companies as an asset class for a number of reasons. The diverse and interesting range of startups available for investment means that first time startup investors are often attracted by the chance
An angel investor invests their own capital into early-stage companies. They often actively invest in multiple startups and seek to add strategic value through introduction, connections, and advice.
An angel group is a collection of angel investors that meets to hear pitch presentations, discuss investments and/or invest together.
A venture capital invests funds into startups on behalf of the fund investors. The firm may have Limited Partners who invest the funds and General Partners who manage the funds and make investment decisions.
Some large corporations may choose to make early-stage investments through a corporate venture capital division. These investments may be intended to provide strategic advantage in the corporations industry through the acquisition of emerging technology and talent, or to diversify the corporation’s interests.
A family office invests funds on behalf of high-net worth individuals or an extended family of high-net worth individuals. Family office funds may be managed by a multi-family office which manages funds for several families, a single-family office which focuses on a single family or self-managed by a member of the family.
Registered Investment Advisors are financial professionals that manage investment funds and financial decisions on behalf of high-net worth individuals. Some RIAs invest in startups because their clients are interested in early-stage investing.
We have streamlined the online investment process to work effectively for all types of investors regardless of their objective. Feedback from startup investors on SeedInvest suggests that they are motivated to invest online as a result of:
- Looking to make direct investments into the venture asset class
- Looking to execute transactions online
- Looking to co-invest alongside other investors
- Add an additional source of dealflow
- Diversify portfolio with a wider range of startup industry verticals, geography, and company stage
This post was written by anmareewilliams on December 12, 2015
Types of Startup Investors