Private Money Investors – Who Are They And Where Can They Be Found?
If you’re looking for private money investors to get funding for a business project or a real estate deal then you’re looking for a certain type of person.
Private Money Investors – Who Are They?
Private Money Investors
Let’s start with a working definition of a private money investor. Obviously these people are not banks. They are private individuals who have money to invest in various enterprises to get a profit. In the broadest sense the definition includes anyone or group who has money to invest and does not want to make a loan.
The main thing to keep in mind is that a private money investor is looking for profit and not looking for interest on their money. They already get interest on their money from banks. They are looking for a stake in the enterprise they invest in.
Private Money Investors – Definition
A private money investor is any individual or privately held entity, such as an investment group, which gives money to a business or person for use in that business or for a specific project, and in return expects to receive an interest in that business or project. These investors are sometimes referred to as Angel Investors.
The goal of a private investor is to increase the amount of money invested over time. The time period may be as short as a few months or may last for many years. However, most private money investors would like to get their return in 5 years or less. In addition, these private investors are looking to make a return of 10 times their investment when they cash out.
What Does A Private Money Investor Want?
Private money investors in general are looking for a piece of the action. They want profit and not interest on the money invested. So they are not making a loan. This is crucial to understanding what a private investor is looking for. The investor wants to own part of the enterprise or project. That ownership interest is usually expressed as a percent of ownership.
The ownership may take the form of stock, if the enterprise is a corporation, or a membership interest, if the business organization is an LLC. In a partnership it would be a percentage of the partnership. But in all cases the private investor would be a part owner in the business, enterprise or project.
What does this have to do with you when you are seeking funding for your business or project?
What Are You Willing To Give Up?
Every private money investor is looking for an offer from the person seeking the funding. The investor wants to know how much will they get for their money. The private investor wants to know what their return on investment (ROI) will be. When will they get it?
What this means for you is, what are you willing to give up to get the funding you need to make your business or project go? How much of your expected profits are you willing to give to an investor to be able to use his or her money? What percentage of ownership or profits are you willing to part with to make it work?
You have to know what you are willing to live with first in order to make that offer to the private money investor. You have to determine what you expect to get out of your business or project. Then you can give up the rest to make it come about. Once you know that, you can make your offer to a private investor and have a reasonable chance of getting it accepted.
What Control Will You Give To A Private Money Investor?
With respect to private money investors, there are basically two types, the ones who want to control the business or project and those that don’t. You have to determine which kind you’re dealing with. If the investor wants control, that investor may be in a position to take over your business and take it from you when it develops into something that is really worth a lot of money.
So you need to be careful in your offer to be able to keep whatever measure of control makes you feel comfortable. If you don’t, all your hard work may go to someone else. But if the investor doesn’t want control you don’t have to be so cautious.
Private Money Investors – Where Are They?
Private investors are everywhere. You just have to recognize them. They are the people who have excess money, more than they can reasonably use for the necessities of life.
Private money investors could be professional people like doctors, lawyers, successful business people, and many other occupations where they make a lot of money such as Internet Entrepreneurs. These people could be all around you just looking for an opportunity to invest their money and make much more than putting it in a savings account or certificate of deposit (CD). These may also be ordinary people who have amassed amounts of money in an IRA or retirement fund who want to make additional income on their money.
If you know any of these people it might be worth the asking to see whether they would be interested in your business or project. You might be surprised at their response.
But in addition, there are private money investors who are actively seeking projects to invest in. These are the ones who advertise on this web site. They want to see your business or project proposal to see whether it fits within their guidelines.
So, create your proposal and offer the best deal you can. Then check out these private money investors, because they really need your project to make their investments grow.
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