Who Actually Invests in Private Companies?
For most founders, the idea of “raising capital” feels both exciting and mysterious. You hear about angels, venture capital, private equity, and institutional investors — but who are they really? What do they each look for? And how do they fit into the fundraising journey from Seed to Series C and beyond?
Let’s break down the full spectrum of investors in private companies in plain language.
1. Angel Investors
Who they are:
Angels are individuals who invest their own money in early-stage companies. They’re often former entrepreneurs, executives, or professionals with disposable income and an appetite for risk.
When they invest:
Typically in the Pre-Seed or Seed stages — before institutional venture capital gets involved. They might invest anywhere from $10,000 to $250,000 per deal, often joining others in a small syndicate.
What they want:
Angels invest in the founder as much as the business. They look for a big idea, strong execution, and a founder they believe in. Returns can take years, so trust and vision matter most.
How to find them:
Through networks, introductions, angel groups, or platforms like AngelList. In Canada, organizations like Maple Leaf Angels or Capital Angel Network play this role.
2. Family and Friends Investors
Who they are:
Your immediate network — people who believe in you, not necessarily the business model.
When they invest:
Usually pre-revenue, to get the idea off the ground. They’re often the first outside money in the door, before angels or venture capital.
What they want:
To help you succeed. They rarely expect liquidity soon, but these rounds must be treated professionally, with clear terms and documentation to avoid tension later.
3. Angel Syndicates and Micro-VC Funds
Who they are:
Groups of angels who pool capital through a structured vehicle, often managed by a lead investor. Micro-VCs are small venture funds that behave like professionalized angel groups.
When they invest:
Usually Seed or Series A. Typical cheque sizes range from $250K to $2M.
What they want:
Early signs of traction — paying customers, strong gross margins, and a clear market opportunity. They often want convertible notes or SAFEs rather than priced rounds to keep things simple.
4. Venture Capital (VC) Firms
Who they are:
Professional investors who manage pooled funds on behalf of limited partners (like pension funds, endowments, and wealthy individuals).
When they invest:
Across Seed, Series A, B, and sometimes C.
Seed VCs focus on early traction and team potential.
Series A investors look for evidence of product-market fit.
Series B and C investors focus on scale and market leadership.
What they want:
VCs aim for high growth and large market potential. They expect 10x or higher returns on successful investments, knowing most deals won’t hit that mark. They’re active investors — providing guidance, board seats, and future funding rounds.
How much they invest:
From $1M to $20M+, depending on the stage.
5. Corporate or Strategic Investors
Who they are:
Large companies that invest in startups aligned with their industry or strategic interests. Think of Coca-Cola investing in beverage innovation, or Shopify supporting new commerce tools.
When they invest:
Typically Series A through C. They like to see proven traction and some operational maturity.
What they want:
Strategic alignment more than short-term profit. They invest to gain access to technology, markets, or new ideas. A corporate investor might also become your acquirer later.
6. Investment Brokers and Finders
Who they are:
Licensed individuals or small firms that connect private companies with investors. They don’t usually invest directly — they facilitate introductions and structure deals for a success fee.
When they get involved:
From Seed to Series B, especially when founders have a solid business but lack investor networks.
What they want:
A credible story and professional materials — deck, model, valuation, and terms. They operate under regulatory oversight (such as exempt market dealer registration in Canada or FINRA in the U.S.).
Why they matter:
Brokers bridge the gap between “ready” and “funded.” They can open doors to angels, family offices, and small funds that founders often can’t reach alone.
7. Investment Bankers
Who they are:
Professional advisory firms that manage large, structured transactions — growth raises, recapitalizations, mergers, or sales.
When they engage:
Typically Series B and beyond, often when companies are raising $5M–$50M+ or exploring a sale.
What they do:
They prepare materials, identify qualified investors (institutional or strategic), manage outreach, negotiate terms, and close deals.
Why they matter:
They have deep networks and credibility in the market. The best bankers act as strategic partners, not just deal brokers.
8. Family Offices
Who they are:
Private wealth management groups representing high-net-worth families. Many invest directly in private businesses or through co-investment deals with funds or banks.
When they invest:
Typically Series A through C, but they can join earlier if the family has relevant industry expertise.
What they want:
Solid cash flow, professional governance, and patient growth. Family offices often have longer investment horizons than venture funds.
9. Private Equity Firms
Who they are:
Institutional investors who buy meaningful or controlling stakes in established, cash-flowing companies.
When they invest:
Usually Series C or later — or during exit/recapitalization stages. They look for businesses doing $10M–$100M+ in revenue with strong margins and management depth.
What they want:
Predictable earnings, clean financials, and growth potential through scale, acquisition, or operational improvement. PE firms can fund buyouts, recapitalizations, or succession transitions.
Typical investment range:
$5M–$100M+ depending on the firm size and structure.
10. Institutional Investors
Who they are:
Large organizations — pension funds, insurance companies, endowments — that invest through private-equity or venture funds rather than directly into small companies.
When they’re involved:
At the fund level, not typically with individual businesses unless you’re approaching a late-stage or pre-IPO round.
What they want:
Diversification, stability, and returns that beat public markets over the long term.
11. Go-Public Advisors and Capital Market Firms
Who they are:
Investment banks, capital-market advisors, and law firms that guide companies through IPO or reverse takeover (RTO) processes to access public markets.
When they engage:
Once a company has $20M–$75M+ in revenue and consistent profitability or strong growth.
What they do:
They underwrite offerings, prepare prospectuses, secure institutional investors, and manage regulatory filings.
Why it matters:
Going public is often the final liquidity step — providing both access to capital and a clear path for investor exits.
12. The Typical Flow: From Seed to Exit
Final Thoughts
“Investors” aren’t one uniform group — they’re an ecosystem.
The key is understanding who fits your stage and what they value most. Early on, it’s about story and belief. Later, it’s about performance, scalability, and governance.
The most successful founders treat capital raising not as a one-time event, but as a progression — one where each round earns the right to the next.
If you want to talk about raising capital with Founded Partners, reach out.