Types of Investors

1. Angel Investors

Angel investors are high net-worth individuals who provide financial backing to startups, entrepreneurs, or small businesses. The typical amount for an angel investment can vary greatly. In some cases, angel investors invest $100,000 or more. Angel investors usually ask for a share (partial ownership) of the company.

2. Peer-to-Peer Lenders

Peer-to-peer lending, or P2P lending, is a way in which the investor is matched with potential borrowers to receive money for a loan. The lender will request crucial information to decide if they want to lend you, the borrower, the money, including credit rating history, income, yield range, and more. Each month, you pay back the loan with interest. 

3. Personal Investors

Businesses can turn to their family, friends, and networks for their first investments.  Talk to an expert if you have people eager to help; only a certain amount of people can invest in start-ups, and you’ll need to provide thorough documentation. You will pay the investor back with interest.

Seed Capital–https://www.investopedia.com/terms/s/seedcapital.asp

4. Banks

Banks are a classic source for business loans.  Before your application is approved, you will need to produce proof of a revenue stream or collateral.  Because of this, banks are usually a better option for established businesses, but you don’t need to be a mogul to get financing. You will pay the bank loan back with interest.

5. Venture Capitalists

Venture capitalists typically invest millions of dollars in startups, entrepreneurs, and small businesses by securing a share in the company. This is known as equity capital. This is done with the assumption that the equity capital will increase, and the venture capitalist will receive a positive return on their investment.

6. Crowdfunding

With crowdfunding, startups rely heavily on donations from both personal and professional networks. The success of crowdfunding efforts is often bolstered by a savvy marketing strategy and social media amplification.

7. The Government

You can get a loan or a grant with a government program, depending on where you are located and what type of entrepreneur you are, e.g., woman, immigrant, etc. This is not your ideal investment if you are short on time - it can take months and months to get money from a government program. These programs can also dictate how you use the money that you’re given, which can be detrimental to your business in the short and long-term. 

8. Credit Cards

Another option for loans for small businesses would be credit cards. It is not a bad way to float a small, short-term project that would see a good return in a short time span. This is obviously not a great way to finance a long-term investment but still an option and there aren’t any approvals or pitch processes to get one!

Sources:

https://larta.org/idea/5-types-of-investors/

https://moneymorning.com/angel-investing-101/types-of-startup-investors/

https://www.linkedin.com/pulse/types-investors-what-different-how-approach-each-april-ly/