8 Types of Investors for Startups

The sensational standards that startups have set in recent years across various industries and business niches have inspired countless aspiring entrepreneurs to take their ideas to the masses. As a result, investors have thrived, from the supportive mother who wants to see her son climb up the stairs of success to venture capitalists pumping in millions to an expanding global business.

If you are one of those who is headed towards establishing a startup, here are some of the investors that you can expect to count on as you get your entrepreneurial journey underway:

1. Bootstrapping

For self-reliant entrepreneurs, bootstrapping is the way to go. Instead of relying on investments from external sources, the entrepreneurs use their funds to get their businesses going. Of course, the risks are high, but over the years, several startups that started as bootstrapped projects have made headlines around the globe.

Think Apple, Facebook, Microsoft, and Coca Cola; all bootstrapped enterprises at the time of their inception. The best thing about bootstrapping? You have total control of every aspect of the startup.

2. Family and friends

If your personal circle is a supportive one, a potent business idea will not go unheard or unappreciated. Contributions from family and friends rank as one of the most common forms of investment during a startup’s nascent stages.

While financial support may not be very high, moral support can be a great motivator for new entrepreneurs first to survive and then thrive. Such investments also leave entrepreneurs in control of their startups.

3. Crowdfunding

Not a conventional type of investment, crowdfunding has gained traction in recent years and has emerged as a great alternative for entrepreneurs brimming with innovative ideas. Makers of virtual reality (VR) headsets Oculus were allowed to succeed through a crowdfunding campaign on Kickstarter.

Typically, crowdfunding works when an aspiring entrepreneur has an existing online following. In recent years, independent musicians have used crowdfunding to varying degrees of success as well. However, crowdfunding cannot be counted upon as a regular source of investment. Plus, crowdfunded projects have to give something back to the investors, such as first access to new products with discounts.

4. P2P lending or crowdlending

P2P lending, popularly known as crowdlending, is taking a loan from the combined funds of multiple borrowers online. Online platforms such as EstateGuru, Fast Invest, and Swaper have become popular with entrepreneurs due to their considerably lower overhead costs than banks.

While generating funds through this method will not be able to get you as much as a specialized startup loan from a bank would, it is a viable option for entrepreneurs

See the full list here.

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