| Private investors provide equity finance for business | | | | capital needed as investors won't be interested in |
| opportunity. They invest money into new and | | | | guess work; they will want specific numbers. |
| up-and-coming businesses; they have no preference | | | | The most common type of private investors are |
| in the industry sector that they invest in as they | | | | angel investors, otherwise known as business angels. |
| have a wide range of interests. | | | | These angel investors hold extremely high risk and |
| Private investors bring money to a business that is | | | | require a very high return on investment. Due to the |
| needed to move the business forward. As well as | | | | fact that a large percentage of angel investments |
| bringing in the required funding to get a business off | | | | are lost completely when early stage companies fail, |
| the ground, a private investor will also provide your | | | | private investors seek investments that have the |
| business with the skills and contacts that are needed | | | | potential to return at least 10 or more times their |
| to help your business progress. | | | | original investment within 5 years, through a defined |
| 2008 has, so far, not been extremely rewarding for | | | | exit strategy, such as plans for an initial public |
| private investors, which is why it is so important that | | | | offering or an acquisition. |
| you explore investments which are well positioned | | | | There are many different ways to describe private |
| for a longer term favourable theme rather than | | | | investors; they have many names attached to them |
| those dependent on a highly unpredictable economic | | | | such as venture capitalists and business angels. These |
| cycle. | | | | private investors are often retired entrepreneurs or |
| With private investors some investors will invest | | | | executives. They can provide your business with |
| passively, which means that after providing a | | | | valuable management advice and important contacts. |
| company with the finance needed they will play a | | | | Private investors are wealthy individuals who invest in |
| limited role within the company. In cases such as | | | | high growth business. |
| these the investors are usually professionals in | | | | Private investors are growing to be one of the most |
| medicine, law, real estate etc. Other investors | | | | popular ways of gaining business finance. This is |
| however will want to be increasingly involved and will | | | | making equity finance overtake debt funding as the |
| use their network and experience to drive your | | | | best way of funding your business. Private investors |
| business. They will also want some type of control | | | | are really worth looking into if you are hoping to start |
| with business decisions. | | | | your own business. You do however have to ensure |
| When it comes to getting the help of an investor it is | | | | that you have your business plan wrote to the |
| important to know that private investors have more | | | | highest standard if you want to attract the help of |
| confidence investing with people that they know so | | | | private investor as they will use your business plan to |
| the fewer degrees of separation equals a greater | | | | see if your business has a high chance of being |
| chance of a deal being done. Before any deal is made | | | | successful. |
| it is important that you decide on the amount of | | | | |