Five Kinds Of Investors: Which One Are You?

Investors play an integral role in taking a business idea to the next level. They support businesses whose products and services they believe have the potential to provide innovative solutions to common or complex problems. In this blog post, seasoned business leader Ram V Chary looks at five types of investors.

Banks: For entrepreneurs who may not have a vast network, banks can become their primary investors. However, qualifying for bank loans has become more difficult since the 2007 global financial crisis. In addition, centralized financial institutions typically require entrepreneurs to submit an extensive business plan, a report or illustration of the venture's products or services, management projections, financial projections, and strategies for implementation.

Angel investors: Some entrepreneurs, small businesses, and startups receive support from high-net-worth individuals referred to as angel investors. Generally, these investors are successful business leaders themselves. According to Ram V Chary, the number of angel investors has doubled since 2005.

Venture capitalists: Angel investors are not to be confused with venture capitalists. Unlike angel investors, venture capitalists invest millions in small businesses, entrepreneurs, and startups whose business plans they firmly believe in. According to Ram V Chary, these investments are generally made in exchange for a share in the company. Joining venture capital firms requires experience, skill, and a significant entrepreneurial circle.

Peer-to-peer lenders: Peer-to-peer lending enables small businesses to support startup companies without the middleman. P2P lending is a relatively new form of investment that requires entrepreneurs to give investors access to their credit history. Some lenders may recommend peers raise their credit scores to receive loan approval.

Personal investors: Family and friends can help their loved ones start businesses. Small businesses, startups, and entrepreneurs may seek financial backing from their personal circle. Though there is a limit to the amount startups can receive from private investors, the terms of these investments are generally less aggressive than with funds from venture capitalists and large banks. Ram V Chary advises keeping proper documentation of assets and growth to prevent rifts within families.

Ram V Chary is a seasoned business professional who has held numerous executive positions that supervised local and global operations. Outside of work, he supports the Leukemia and Lymphoma Society. Head over to this page to read more from Ram V Chary.