SA Crowdfunding Blog

Venture capital and start-up investment have traditionally been dominated by the big players. After all, they have usually had more resources to help them choose a good startup business than the others. Moreover, entrepreneurs have traditionally preferred wealthier investors because they get more capital. However, start-up investments are slowly but surely becoming accessible to the average investor. To understand what this means for entrepreneurs and investors, it is important to learn about startup investments first.

Startup investments

The terms venture capital investment, start-up investment, and angel investment are different in their own way, but they share the same common concept, which is that of investing in a new firm or a new product or service that is being launched by a firm. The money that is invested is used as capital by the company to carry out its plan.

If the investment is for a start-up, the money is generally used to begin product of a company until its revenue stream increases to the point where it can sustain its capital. Of course, the investors who provide the money to the company get something in return as well. This can either be a certain number of equity shares in the company or a certain percentage of equity ownership.

Why invest in start-ups and support entrepreneurs

Every year, several entrepreneurs think of new and promising ideas for a business, but fail to turn them into a reality. One obstacle that stops a great business idea from getting into the real world is capital, or the lack thereof. The large money lenders, including banks and financial institutions, are very cautious about funding any business idea, and so, a lot of promising ideas go to waste. However, startup investments or angel investments can help such promising and radical ideas to see the light of day.

Published in SA Crowd Funding Blog

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