Depending on a company size, needs, and industry, there are many types of available capital partners. This post outlines several different types of financial partners available to companies.

Angel Investors

Angel Investors are generally wealthy private individuals who invest in pre-revenue companies. They are may invest individually or as part of a fund or larger organization or network focused upon seed level capital. Investments from Angel Investors are generally less structured than investments from Venture Capital.

Venture Capital

Venture Capital Investors have funds that invest in companies with specific characteristics such as industry, company size, investment size, and geographic location. Venture Capital investments are generally highly structured products with extensive governance provisions, consent rights, and liquidity preferences. Venture Capital investors will often hold their investments for a set period of time and expect an exit by the end of that period.

Small Family Offices

Small Family Offices are similar to Angel Investors, but may manage their own capital as a fund. A family office manages either a single family’s wealth or a small number of families’ wealth. Family Office Investors are often more flexible and patient than Venture Capital Investors as they are investing their own capital, and generally do not require extensive governance provisions and consent rights.

Friends & Family

Earlier stage companies often raise capital from friends and family. Individuals with whom a founder has an existing relationship are often more likely to invest in a business at the idea or pre-revenue stage than an angel investor. Having friends and family invest in your company can, however, be tricky if things do not go well.

ClearThink Capital LLC