Want to Find Investors? The following are the different types of investors in the startup world

The first step people often think about in owning a successful business is finding a gap in the market and filling it with a service or product. In fact, having sufficient capital is one of the main points that you must have before opening a business. If you don't have capital, looking for investors can be a way out.

Receiving investment in your startup or small business can be an important step towards starting your business, but getting startup funding is not always as easy as it sounds. There are many types of investors around who may not be interested in your business, for various reasons.

Investors look for projects and ventures that they believe will be successful or match their interests or beliefs. It's important to find some type of investor that you think will be successful.

So, there are several types of investors that you can get funding from. Who is who – how are they different from one another? What type of investor is right for your startup or business?

The Importance of Looking for Investors when Starting a Business

In this article, written by tipandroid, we will explain in more detail about some of the most popular types of investors for startups in initial funding:

Accelerators and Incubators
Angel Investors
Bootstrap
Banks
Corporate Investors
Micro Loans
Peer-to-Peer lending
Private Investors
Venture Capitalists

Bootstrap

Bootstrapping is a viable option only if you have the money to fund your own startup. In this type, you invest in your own company. This type of investment most often occurs in the idea stage when you are just starting out.

You may not have a business or promotion plan in place yet, and for this reason, it may be difficult to withdraw funds. Putting your own money into a company comes with a myriad of risks, but you benefit from complete control over your startup.

Money from bootstrapping is often used for new equipment, supplies, designing new products or even expanding the business.

If you want to fund your own business, there are a variety of ways to achieve this. Some people apply for money loans with collateral for their valuable objects. In Indonesia, there are many non-bank financial institutions that you can apply for loans for business development with collateral, for example, pawnshops.

There are benefits and risks to each of these methods. Make sure you research thoroughly before taking any action.

Bank

Banks are not technically one of a kind investors, although this step could be a great way for you to find investors. It is usually quite difficult to get a bank loan to start up or a new small business. However, once you get started and start making money, they may allow you to complete a loan application, provide a business credit card or a merchant cash advance loan for your business.

You will need an in-depth business plan when heading to the bank. Bring a full business description, which should include the future opportunities you foresee for the company.

Banks want to make sure that you are serious about your business and have a plan to run it. It's also very important to bring a business proposal, including your financial projections and implementation plan, plus a description of what your business has to offer.

Getting a loan from a bank where you were a client is more difficult than with people who know you. It doesn't matter which bank you go to, you have to prove that you have the means to repay loans and manage debt.

Micro Loans and Small Business Micro Loans

Another type of many investors are institutions that offer microloans. The amount is usually between 1 hundred thousand dollar to 1 million dollar. Loans are generally given to those who cannot get traditional bank loans. These loans can come from crowdfunding sites or cooperatives.

Sometimes all a startup needs to really get things flowing is a microloan. It can buy equipment that is essential to your business so you can start making products and therefore generate income.

For example, a bakery startup cannot start making appliances without an oven. The control these small business investors have varies widely. If you want to have complete control over your startup, you have to set the conditions for this from the start – in writing.

Angel Investors

Angel Investors are those who come to your aid when you have trouble finding funding for your startup. They are often both investors and entrepreneurs with their own business experience who want to help others. They will generally look for startups that they believe will be successful.

This type of investor has been trending lately, so most people by now have heard of the term angel investor. Sometimes, these investors become family members or friends of startup owners, or rich man who perform this function.

How many times have you expected funding from an angel investor? In general, this will be a one-time funding amount. However, occasionally they will offer ongoing financial support. This type of investor is known for offering better terms for startups than other types of investors. This is because they want business owners to be able to scale up the business and run more than make money on their investment.

Angel investors usually get a share of the shares in the companies they invest in. Sometimes they won't want this because they just want to get good results.

Accelerators & Incubators

Another avenue when you are looking for investors for your business is to join Incubators and accelerators. It's a way to move your business idea from the planning stage to fruition. They provide office space, guidance and connections. Some of the startups with the greatest potential can come with seed funding. Companies must be invited to participate in one of these programs.

This is the best way to access different types of investors for beginners. If you are successfully admitted to one of these, you can get between $10,000 and $120,000 in funding.

With this money in your business, you can go from idea to execution and start gaining traction in the marketplace. You will also benefit from learning from experienced mentors and the resources they provide. You may also have the opportunity to speak to business investors with financial resources.

Be prepared to commit and work hard, and you can take a lot out of this kind of opportunity.

Venture Capital

Venture Capital is no different from Angel Investors. They can also provide you with funding for your startup. VCs often invest large sums of money and can help your company become very successful. They can also give credibility to your business, showing that it is a serious company with serious potential.

They are most interested in funding startups or new businesses that show the most potential. The big idea is not their forte, but the execution.

You will find that VCs often want a share of the company and a share of the sales profits. They may even want a patent in return for the investment. They can end up with a large amount of control over your business.

You need to think seriously about how much control you are willing to give up in return for the investment, this is not easy if you are looking for investors and business development at the same time.

Corporate Investors

Big companies are now becoming more interested in investing in potential startups and small businesses. This diversifies their assets and helps them discover up and coming talent for their own business.

It also gives them a way to keep pace with the volatile and changing business market by taking part in young and trendy startups. Some create their own incubator and accelerator programs while others invest in external startups entirely.

Peer-to-Peer Lending

Peer-to-Peer lending or peer-to-peer lending is a new technological way that makes it easier to access funding. You can list your startup online for potential investors to view. It connects startup owners with small business investors.

It is advisable to make a business plan and outline your achievements and goals. You must also prove that you have conducted market research, financial projections and market analysis for your business.

It is very important that you prove that you have worked to create a company that works. Then people may want to invest in your business, because they believe in your vision or work ethic.

These investors will be able to see your credit history, and can only fund those with a good credit score. You can personally negotiate interest in these investments with peer-to-peer investors.

Private Investors

Many startup business people start with investments from family or friends. However, think carefully before accepting this type of investment.

While they may believe in you and your product, it's not always a good idea to mix your business with your personal relationships.

The problem is that you are not only endangering your own personal finances, but also those of your loved ones. If your company fails, you could seriously hurt your friend or family member's finances, which can cause a lot of drama in the relationship.