An investor is an individual or a company who provides money with the expectation that they’ll earn something on their investment.
There are many reasons to want to invest, such as generating retirement savings, funding college or other education, wanting to start a business, or merely to increase savings.
How does an investor make money?
Usually, an investor is interested in long-term projects, rather than quick trades.
Investors can for example purchase stocks in a company—this is called equity—or they can lend money to a company, in the form of a loan. When an investor lends money, they increase their investment by charging interest on the loan.
They can also purchase real estate with the intention to either rent it out and/or resell the properties at a higher price.
When an investor purchases assets, such as real estate, with the hope that they’ll increase in value, it’s called appreciation. They can also earn income, such as dividend on equity, which is money that can be paid out to shareholders in a business when the company is doing well.
Want to get investors for your business?
If you’ve just started a business or a startup, investors can provide funding for equipment, product development, employees, marketing and branding, and so on.
If you’re trying to get investors on board you need to have a clear idea and vision for your business. You need to do market research to figure out if the idea is viable, who the target audience is, who the competitors are, and so on.
You need to communicate the idea to potential investors, so start by setting up a one-page business model—your elevator pitch—and a more detailed business plan. This will demonstrate the value of your idea, and the viability of your business. It’ll also show that you’re serious and committed.