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

 The first step people often think about in having 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.

The Importance of Looking for Investors when Starting a Business

 

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?

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 & Incubators
     Angel Investors
     Bank
     Bootstrap
     Corporate Investors
     Micro Loans
     Peer-to-Peer lending
     Private Investors
     Venture Capitalist 

1. 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 US, 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.

2. 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.

3. Micro Loans and Small Business Micro Loans

Another type of many investors are institutions that offer microloans. The amount is usually between 10  thousand to 1 million dollars. 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.

4. 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 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.

5. 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.

6. 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.

7. 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.

Important Components when Starting a Business

If you have read the above list of types of investors, you will see that there are many different types of investors. While finding investors for a startup is an important step, there are other steps that must be taken as well. Here are some other things you need to do for your business:

Create an attractive website

Creating a great website isn't just about the design, it's also about the content. What are the advantages of your brand? What would you like to convey? It's important that your website looks and sounds good as more and more customers come online to check you out before buying in person.

Become a limited liability company

You need to register to become a limited company that is clear. This should be done before seeking funding. You need to show potential investors that you are a real company.

Create financial projections and financial plans

It is very important that you have a financial project for your company, not only for investors but for yourself. This way, you can see how much you might be expecting and what your exit costs will be.
Find great staff

You need to find creative people that you trust to be your team. You will need a fantastic team to run your business.

Network

Joining a professional organization can be critical to success. Use it to meet other people in your field, make connections and network.

Those are the types of investors and things you should do in your business before looking for investors in business development. Do all that, and your business is growing well and directed. That way investors will immediately glance at your business, without you looking for it. Good luck.

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