American Consumer Credit Counseling explains the different types of business investors that can help entrepreneurs interested in starting or growing a business
Boston, MA – February 13, 2019
There is more than one type of investor that entrepreneurs can look to when fundraising to launch or expand a business. Investors are a big part of a business’s growth and can play a major role in whether it succeeds or fails. To help entrepreneurs, national nonprofit American Consumer Credit Counseling (ACCC) discusses the different types of business investors to consider when starting a business.
“It is very important for entrepreneurs to know the different types of investors that are available to them as they look to start or grow a business,” said Steve Trumble, President, and CEO of American Consumer Credit Counseling. “Entrepreneurs need to understand how these types of investors differ, so they know what is needed for their business pitch.”
Forbes found that Venture Capitalist investments in startups reached a new height in 2017 with $148 billion invested. According to the Bureau of Labor Statistics’ Business Employment Dynamics, 20 percent of startups do not survive the first year, 30 percent do not survive the second year and about 50 percent survive five years. Crowdspring found that 18 percent of startups fail because of cost and 19 percent fail because of too much competition.
ACCC explains the different types of business investors for entrepreneurs.
- Personal Investors – Family and friends can be a good first investment option, particularly in this early period when a business is just getting off the ground and a detailed business plan is usually not needed. Although they may be willing to invest, it is important to understand the risk of bringing family into business decisions. If the business is not successful, it will not only hurt finances, but it could also hurt relationships.
- Banks – Entrepreneurs may go to a bank they already have a relationship with and provide proof of stream of revenue and a business plan to apply for a business loan. The different loan programs include 7(a) loan program, Microloan program, and 504 loan programs. Banks are also helpful as the business grows because they will offer lines of credit and business credit cards.
- Angel Investors – Angel investors are wealthy entrepreneurs with the means to help other entrepreneurs with their startups and can serve as mentors. Some may take out a stock or a loan to invest. Others are considered return on investment angel investors and will expect pay back for the high-risk investment.
- Peer-to-peer Lending – These are individual or group investors that offer funding to entrepreneurs trying to start a business. This is an online world where entrepreneurs fill out an application online with a plan, background story, and any achievements. Lenders will go through the applications and decide which they want to support. Prosper and Lending Club are two websites that support peer-to-peer lending.
- Venture Capitalist – Before going to venture capitalists, entrepreneurs will need a solid business plan and a high return on profit. These investors will invest millions by buying a share in the company or equity capital. This means the entrepreneur will be giving up some of their ownership.
ACCC is a 501(c)3 organization that provides free credit counseling, bankruptcy counseling, and housing counseling to consumers nationwide in need of financial literacy education and money management. For more information, contact ACCC:
- For credit counseling, call 800-769-3571
- For bankruptcy counseling, call 866-826-6924
- For housing counseling, call 866-826-7180
- Or visit us online at ConsumerCredit.com
About American Consumer Credit Counseling
American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling 501(c)(3) organization dedicated to empowering consumers to achieve financial management through credit counseling, debt management, bankruptcy counseling, housing counseling, student loan counseling and financial education concerning debt solutions. To help consumers reach their goal of debt relief, ACCC provides a range of free consumer personal finance resources on a variety of topics including budgeting, credit and debt management, student loan assistance, youth and money, homeownership, identity theft, senior living, and retirement. Consumers can use ACCC’s worksheets, videos, calculators, and blog articles to make the best possible decisions regarding their financial future. ACCC holds an A+ rating with the Better Business Bureau and is a member of the National Foundation for Credit Counseling® (NFCC®). For more information or to access free financial education resources, log on to ConsumerCredit.com or visit https://www.consumercredit.com/debt-resources-tools/