Who are risk capital investors?
You have probably heard about individuals, private equity or venture capital funds that are ready to invest in promising business opportunities on condition that an enterprise carrying this business meets certain requirements. In general risk capital investors can be divided into wealthy individuals or their representatives and incorporated investment funds, which are run by professional investment managers.
Business angels
According to risk capital terminology individuals who act as investors in privately held equities of enterprises are called “business angels”. Usually business angels are experienced businesspersons in their best age, most likely retired, who have deep knowledge about certain industry and have got free cash for investment. They prefer to invest in companies that operate in the industry of their interest.
Risk capital investment funds
Even though the vast majority of start-up businesses are financed by business angels, incorporated risk capital investment funds play very important role in the financing of enterprises ranging from early to mature stages of development. Risk capital funds are firms, which are created by professional investment managers and institutional investors such as pension funds, insurance companies, investment banks and others.