As a business start-up, one of the most challenging decisions you will face is determining how you fund your venture. Gone are the days where your sole source of funding was a local bank or building society, with modern entrepreneurs empowered by far greater and more flexible options.
From venture capitalists and angel investors to crowd-funding websites, we live in an age of peer-to-peer lenders that empowers businesses of all types and sizes. The key is to find an investor profile and type of backer that suits you, as well as they nature of your business proposition.
What type of Business Investor should you look for?
Not only will you need to find a backer who shares your philosophy and appetite for risk, but you will also need to identify individuals who believe in the unique value proposition of your concept. With this in mind, let’s consider the best options depending on the nature of your business idea:
Venture capitalist investors for the high-rollers
Occasionally, business start-ups come along with immense potential and a seemingly fool-proof commercial plan. Whether this relies on a patented solution to an age-old consumer problem or a high-volume venture that benefits from low costs, these propositions tend to have investors competing for a share of equity.
If you own such a coveted patent or business idea, your best bet is to partner with venture capitalist investors. These can be individuals or privately-owned corporations, but they usually target start-ups with the potential for high growth and future expansion. These investors also assist with business planning and guidance, so they are ideal for tech experts who have intellectual property but are inexperienced in business.
For the Maverick Entrepreneur with a risky proposition
History is full of maverick entrepreneurs, many of whom launch their ventures with little more than a simple idea and a loosely developed business model. They also have great instincts and tenacity, however, meaning that all they require is a like-minded investor who is willing to back them to the hilt.
For this type of start-up, entrepreneurs are best off seeking an investor such as a gambler who has accrued their capital through traditional ‘red brick’ or online casinos. Virtual outlets, such as Royal Vegas Casino for example, offer easy access to such players and allow them to deposit in manageable amounts.
This type of investor will understand the nature of risk and will likely share your philosophy on risker ventures. Sure they will calculate the odds and demand a return, but at least this type of investor has an appetite for the unknown and the rewards that it can bring.
Angel Investors for Smaller Start-ups
If you have a more modest business plan that drives longer-term growth, you should instead target angel investors. These are usually high net-worth individuals who seek high returns but are not bound by the guidelines of a specific investment form or corporation.
This means two things. Firstly, angel investors are more inclined to seek out smaller or slightly riskier business proposition that have a potentially significant return. To offset this risk (and because of the fact they are individual investors), however, they are also likely to provide slightly less money while demanding proportionally higher equity.
Still, the experience and wealth of these investors makes them an invaluable resource for small-scale start-ups.
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