Starting a new company is difficult, and one of the hardest parts of it is securing the funding to establish everything needed to get the company off the ground and on its own legs. There are several investor options available to you, but what startup investor is right for your company?
Angel investors, or startup investors, are often individuals that invest in start-up companies that they are interested in, and they invest their own personal money at the early stages of that company’s life. Many companies will aim to get angel investors almost first, pursuing funding from angel investors before any other investor type, but after the founders and their family and friends. Angel investor seed funding will help a company establish themselves before they can generate their own funding or before they can seek out other types of investments. Angel investors often invest somewhere between $25,000 and $100,000 on average.
Venture capital funding is funding that comes from investment funds that are pooled by many individuals or companies into one group fund. Venture capital investment groups will generally invest in the early stages of a company, but later than angel investors; they are made up of partners, associates, and analysts that will research which companies will give the fund the best possible return if they are successful and will inject funds into that company. Venture capitalists, as a startup investor, will generally fund a company in the millions of dollars per funding round.
Accelerators are startup investors that focus more on education and mentoring than just on straight-up funding. While they will often fund around $10,000 – $40,000, they will also provide access to mentorships and rapid education to ensure a company has the knowledge to succeed quickly. Start-ups will exit accelerators by showing off what they have accomplished during the accelerator period through “demo days,” bringing in other types of investors.
Differentiating from accelerators, an incubator startup investor generally does not invest any money in a company; instead, they provide access to the tools for success as a start-up. Incubators will make available physical studio space for a company to work out of, access to infrastructure, such as printers and network access, and the opportunities to network with other professionals through events.
A start-up studio is a type of startup investor that will help companies by developing and testing ideas directly in the marketplace. Through their research, they will take the most promising ideas and give them over to start-ups to allow them to grow into a viable business. Start-up studios want to help quickly create start-ups that are immediately ready for venture capital investments and independence.
By now, most people have heard of crowdfunding platforms, such as Kickstarter. Equity crowdfunding is a similar form of startup investment. Instead of getting large groups of people to invest in a company in exchange for gifts, they will receive shares in the company. Equity crowdfunding is relatively new, and it may scare off other types of investors because they will worry about whether regulations will be followed appropriately.
If you are a start-up looking for a startup investor in the Texas area that provides services to educate, build connections, offer space, and help grow your company, then check out Bayou City Labs.