For many companies, large and small, and in a variety of different situations, private investor capital can be absolutely necessary for continued growth and longevity. This capital, sometimes called private equity investments, is extended to companies to help them in their growth by individuals that are typically highly educated and quite wealthy. These angel investors seek different investment opportunities, all depending on many different factors. Usually, though, private investor capital is more easily acquired than venture capital.
With venture capital, the firm making the investment generally wants a high rate of return on invested capital, and these companies will usually seek to micromanage and otherwise control many aspects of the companies they invest in to achieve these results. Rather than allowing this to happen, it is far often better for a company to seek out private investor capital, since the investors usually aren’t as strict in their funding process, don’t demand nearly as much sway with the day-to-day actions of the firm, and not only do they not expect as high returns on their investments, but it doesn’t usually take as long for these investors to decide as to fund a company as venture capitalists do. To give some comparative examples, on average venture capitalists invest about $5-7 billion in 1,000 different businesses every year, whereas placements through private investor capital typically reach $20 billion a year spread across 50,000 different companies. When compared to the fact that about 300,000 new companies are started every year alone, it can be sent that in general companies—startups especially—are better off going after private investor capital than venture capital.
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