Finding hot investors is one of the most challenging aspects of starting a new business. It’s not always easy to find the money you need, and it can be even more challenging to find someone who will invest in your company when there are so many other options out there. Investors want to ensure that they’re making an investment that will bring them returns. However, since every startup is different, it can be hard to predict what kind of return on their investment they’ll get. Small business financing companies like Fundwise can help you understand the differences between different types of investment options.
This blog post offers some tips on finding the best type of investor for your company’s needs!
What is Seed Money, and Why Do Startups Need it?
Seed money is the first funding round a startup will get before it can start generating revenue. Early-stage companies need seed money to develop their product or service, hire employees, and find customers for their business. It’s often called ‘seed’ because it gets the company started on its journey towards success – just like seeds planted in the dirt that grow into flowers! There are basically two types of investors you could go with when trying to raise this early-stage capital: angel investors or venture capitalists. While each has their pros and cons, we’ll walk you through them both so that you’re best prepared to choose which one fits your needs best!
The Early Stage Angel Investor vs. Venture Capitalist
Choosing between an angel investor and a venture capitalist can be tricky. Some entrepreneurs go with angels because they like the personal touch and feel more comfortable working with fewer people. Others opt for VCs because of their experience, connections, and access to considerably more funding. The angel investor is usually an individual with a bit of money on hand to invest in different companies. Angels tend to invest smaller amounts than venture capitalists, but this depends on your startup’s size and how much you’re looking for from them. Venture capital firms are groups of several investors (and possibly one lead) all pooling together their cash so that they can get big deals done fast! One firm may have hundreds or thousands of partners, while some only work with two or three others at a time.
If you’re a startup in Chicago, IL, looking for ways to raise finances for your startup, then you shouldn’t worry. Fundwise, the premier startup financing company in the region, is here to help you. We help startups find their feet by giving them the financial capital they need and helping them connect with interested investors. Apply now in 30 seconds and get quick funding for your venture.