The speaker describes different types of investors for startups, starting with friends and family. They explain that these investors typically invest smaller amounts and do not perform extensive due diligence.
What this video covers
The first is friends and family. Essentially, those are the people that love you and those that already know you that are not going to go into a lot of detail or due diligence to understand what you’re up to and to see if it makes sense or not to make an investment. Those types of investors are going to be investing anywhere between
,000 all the way to
00,000. Again, they’re not going to be sophisticated people, so you can’t expect them to open any doors, make any introductions. Essentially, they are people that are close to you, that love you, and that’s why they are investing.Next are the banks and government programs. Banks are the worst, really, when it comes to giving money for early-stage companies, but you have, on the other end, the government programs, which is like grants. The beautiful thing about grants is that you are asking or making an application in order to receive an investment without giving away equity. It’s a really great thing if you are an early-stage company.
Next, you’re going to have the angel investors. Angel investors are really a fantastic source of investments when you are at a seed stage, which is the first round of financing that you’re raising besides the friends and family money. Essentially, angel investors are going to be giving anywhere between
0,000 all the way up to $50,000 – typically, it’s around
5,000, the average. But you can see super angels that are investing all the way up to 4 million dollars. Those are called the super angels.Then, you have the angel groups. Angel groups were a great way for people that were not really connected and that were perhaps senior executives to come together and share deal flow, and then also take a look at doing their due diligence together on certain opportunities.
The next is the accelerators or incubators. Those are really great programs that get involved at the very early stages. You have the Y Combinators of the world, Techstars, Dream Ventures – there are great, great accelerator programs out there.
Then you’re going to have family offices. Family offices are the vehicles that have been started by the typical people that you would see on the Forbes richest, wealthiest list. The Forbes millionaires, for example. Typically, those vehicles – it only makes sense to establish when you have available at your disposal at least
00 million to invest. Again, it’s going to be super-wealthy individuals. These are going to be people that can invest all the way up to $4 million in one single ticket size. This is going to be super successful business individuals, people that have inherited maybe from their parents or grandparents that have money, or people that are senior executives that have made a ton of money as salary.
The next is going to be venture capital firms. Venture capital firms are coming in more likely at the Series A round of financing, which is where you’ve already been operating your business for maybe like a couple of years, and maybe you’re shooting for
million and up in revenues. Typically, anything before that is called a micro venture capital firm.
Then, you’re going to have the corporate investors. These are large corporations that are either investing directly or perhaps that they’ve said, what they call the corporate venture arms, where they’ve either established a fund or where they’re investing from their balance sheet into the company that they perhaps want to bring into their universe or ecosystem.
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