Capital Investment

Capital investment is the money used in acquiring a fixed or capital asset. Capital investment money is usually provided by private and non-private sources. Private sources consist of “angel” investor networks, which are typically affluent individuals with money to place in start-up businesses with high potential. These angel investors mainly consist of ex-business owners and CEOs that are retired and have vast expertise in their field. Non-private sources include venture capital firms and SBICs (Small Business Investment Companies). This type of funding is normally more difficult to obtain than private funding. Also, non-private sources are less patient with their return on investment than private sources.

The funding from any of these sources can come in a variety of forms. Most commonly, a combination of equity participation and senior or subordinated debt instruments.

  • Seed; Start-up; First and Second Stage
  • Mezzanine, Bridge, Interim
  • Merger and Acquisition
  • Management Buy-out
  • Pre-IPO and Later Stage
  • Expansion/Development …

Angels require a relatively high rate of return on their investments but are more laid back when it comes to the schedule of payment. Venture capitalists are very strict on when they need their return on investment and can put a lot of pressure on the business owners to deliver their money. Many people have begun to choose Angel investors because of their flexibility and expertise. That is the reason they account for more capital lent in the United States than all non-private sources put together. 

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