What is a venture investor?

Venture investors typically invest in new, innovative startups at an early stage. This type of investor is taking complex risks and contributing funds to projects that may not bring profit at all or can make the investor rich.

We have collected the most helpful information about venture investors, their classification, and what they are like for you to choose what you want to strive for in your investment journey.

The most prominent venture investors are venture funds and business angels.

Angel investors

Professional angel investors are typically approached when a seed round is planned. They fund smaller operations than VCs, may be more flexible, and offer more "personal" value to the project.

Angel investors can be approached directly, at live pitch events, and through introductions from other startup founders. The best of the best make alliances - Angel Groups.

The Angel Group is a tight-knit and growing community of industry pros who invest in promising brands and band together to invest, enabling more confident investing with larger check sizes and lower risk exposure. There has been a significant increase in Angel groups as they become more popular and organized.

Often you can meet groups of angels who invest in one company together - a Syndicate. There are various kinds of Syndicates, but typically, they have a head of the group that, as a rule, invests money at their own risk in hopes of returning double the funds and receiving a percentage from the deal.

Venture funds

Venture investors (venture capitalists, venture funds) - companies and individuals who invest in promising (often technological) fast-growing companies.

Compared to angels, venture investors require certain qualifying factors in a company – for example, a functioning prototype and readiness for a full-fledged entry into the market or the first successful sales.

In general, working with a venture capitalist means a more formal approach. The investment amount in one company ranges from several hundred to several million dollars (usually three to five) and the investment period is 2-3 years.

It is possible to raise investments for a startup not only from business angels and venture capitalists: in many countries of the world, crowd investing or crowdfunding of equity capital (stock crowdfunding) has been operating for a long time.

Crowdfunding

In the digital economy, crowdfunding is a new model of innovative financing projects, assuming a broad involvement of economic agents in fundraising directly. As a recent phenomenon, crowdfunding requires an understanding of its business scheme.

Crowdfunding is one of the types of investment sources. An assessment of the geolocation of crowdfunding platforms and a description of their activities is given. The business scheme of a crowdfunding digital platform is described; it means the crowdfunding process and the campaign's progress.

The types of crowdfunding are analyzed, the reward options for sponsors are typed, and the crowdfunding campaign's algorithm and the crowdfunding project's financial scheme are given. Investors, or backers, can't communicate too much with you on a crowdfunding platform, and you need them to understand what your product is from all your marketing materials.

The 10 best crowdfunding websites

• Most popular: Kickstarter
• The second leader: Indiegogo
• Best for creators and artists: Patreon
• Best for personal projects: GoFundMe

You can invest in the crowdfunding leader of the creators economy Patreon through Raison Marketplace! Get to know the full analytical scope of Patreon operations, financials, development plans, and the potential return on investment on our Youtube channel.

Other sources of funding:

Banks & Government Agencies.

In search of investment opportunities, do not write off the most stable players - Banks & Government Agencies.

Of course, they are not who you typically approach for funding, but they still can be a great source of capital, although not easy to get. But as your project gains traction, banks and agencies may offer business credit cards, lines of credit, and merchant advance loans.

Additionally, there are government grant programs. But it's fair to note that these programs often come with certain restrictions and limitations that may be burdensome for startups.

Corporate investors

In search of new allies, it is essential to look at corporate investors. Entrepreneurs and corporate investors often have entirely different styles and perspectives when it comes to investing.

There are a lot of benefits for big corporations that come with investing in startups. These include diversifying their assets and identifying new talent and technology that can help them fend off industry changes and fuel revenues and profits.

Some corporations create funds specifically to invest in startups, and others launch accelerator and incubator programs to cultivate new opportunities for projects.

Venture Capital Firms

Venture Capital Firms are the holy grail of investors for fundraising entrepreneurs. They come with the biggest cheques, the most power to fuel success and gain market share, and the most juice to achieve more credibility and visibility.

More venture capital firms are looking at and are participating in earlier funding rounds. It is much more likely that these investors will show up and be secured in series A, B, and C fundraising rounds than earlier. Do note that not all of these firms are created equal. The best match can be influenced by location, the timeline of their funds, their interest and expertise in a particular field, their power to help you get to the next stage, and how they treat their founders.

Conclusion

Understanding the differences between these types of investors is crucial for understanding your goals when it comes to investing and how to approach an efficient fundraising campaign by targeting the right investors at any step.