Investor Types

There are 3 different investor types. Do you know which investor type is the one best suited to invest in your project?

There are three broad investor types that virtually all investors fall into. It is critical to your success in raising capital that you properly determine which investor type is most likely to fund your project. To be successful you need to place your project information in front of the right investor type. If you have been sending your business plan out and receiving no replies either your business plan is defective and/or you are sending it to the wrong investor type.

Institutional Venture Capitalist / Angel Investor / Small Investor Group

Institutional Venture Capitalist: This group type invest client funds. Under Federal Securities Law, They are generally subject to what is referred as the “prudent man rule” . Essentially, this means they must act in a manner that a “prudent” man would act. It almost always requires that the project be secured with assets. If they fail to exercise good judgment they can be held liable for any money lost by the investment. If your plan involves unsecured investments they would not be a good choice for likely success.

Angel Investor: Is a professional investor, investing their own funds. In this case, the risk of the investment must be quantifiable and reasonable. In the event of an unsecured investment you can expect to give up control interest including as much as 80% of the projects ownership. Additional, it is equally important that you have a proven track record of success. Track record is defined as "done it before". You will also be asked to put up some portion of the capital yourself. It's referred to as having "skin in the game".

Note: No professional Investor will invest with you without thoroughly vetting your background and credit history. Please note that an in-depth due diligence background check will be performed. All background history will be verified. The background check will include credit history and salary history. You will be asked to sign authorization forms and fingerprints for a criminal history check will need to be provided.

Small Investors (Investor Group): Small investors do not share the same level of sophistication as that of professional investors. Unlike professionals investors with small investors it is mostly about the idea. There is an expression" Like minds think alike". Find people who also think your idea is a great idea and your half there. The rest is presentation and execution. Creating your own investor group has some very distinct advantages.

• Since the amount of money they invest is not substantial, your track record and background history becomes much less important in their decision making process.
• You generally get to retain the majority ownership of the company.
• Small investors lack the level of sophistication you will find in professionals.
• Finding investors can be easier since they are persons who think your “big” idea is great. It’s just another step to convince them to invest. There are several very affordable methods that you can employ to identify these same people.
• Inability to invest your own money in the project is not a requirement by small investors.

This group of investors anyone can put together. It provides you with the greatest potential of success. It also can be accomplished by individuals with modest financial resources. However, there are Federal and State compliance issues and document responsibilities, which you must comply. The seminars will be extremely helpful and each has a money back guaranty.

See our FAQ’s and Answers Sections for Raising Capital, Compliance Federal Law, Creating Investor Documents, Profiling and Finding Investors.

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