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Along with the usual investments such as stocks, bond, and mutual funds, a private investor will often seek out other investment vehicles such as small businesses and real estate.
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Ammad Awan Glasgow - Business Strategy for the Private Investor Knowing your best options is a key business strategy-private investors have unlimited options for investment opportunities. The main requirement is to have sufficient capital. If you as the investor have extra liquid capital, you can really make your money work for you. Along with the usual investments such as stocks, bond, and mutual funds, a private investor will often seek out other investment vehicles such as small businesses and real estate. There are two types of private investors: venture capitalists and investment angels. These two types of investors are polar opposites and represent two different points of view. Venture capitalists are individuals with sufficient capital to invest in a privately owned business. These types of investments can pose large risks. This is why a venture capitalist will ask for a much larger return. This can be helpful for both parties. If a small business is struggling to obtain a business loan from a bank, a venture capitalist can provide the capital needed to get the business off the ground. If you are interested in investing in a small business, be aware of the risk involved. Ensure that their business strategy is a sound one. You need to have full confidence in the product as well as the business owner, and you need to know that the risk is worth the reward. You have the advantage in this situation and can set the terms of the contract. An angel investor is the opposite. Although both types of investors need an abundance of liquid capital, the angel investor is not in it for the potential large profits. An angel investor is trying to lend a helping hand to a struggling business.
Often times, the angel investor is helping a family member or close friend and is more interested in doing that than in what the business does. This investor has a vested interest in the person and not as much in the business, hence the term angel. From a strategic standpoint, we would obviously focus on venture capitalism. Making your money work for you is a great way to build wealth. While searching for your venture capital investment, take into consideration where you would like to invest, what you would like to invest in, how innovative the product is, and what type of experience the business owner has. Obviously if you are investing large sums of money, you will be able to dictate certain aspects of the business strategy, but the business owner can still make or break you. If you do not have full trust in him or her to create and execute the right business strategy for success, then this is not the right investment for you. As a venture capitalist, you are looking for a business in its infancy stages with the potential to produce tremendous commercial returns. Without this, you cannot be successful. A venture capitalist also takes on a managerial role in most cases; hence, there is a need for the capitalist to know both basic and advanced business strategies. If you do not possess these skills, this might not be your best investment. One way a venture capitalist can mitigate risk is by joining forces with other venture capitalists. The individuals combine their funds to purchase a pool of businesses. If one fails, they do not lose their entire investments. Remember the risk involved in an investment as a venture capitalist, and know that this type of investment requires management skills and plenty of capital and, most of all, a keen sense of business strategy.
