What are the different types of investors?
There are two main categories: Equity and Debt. Equity investments are made in exchange for part-ownership or ‘equity’ in the recipient company. Debt investments are what we normally think of as a loan. An investor may offer either or a combination of both types. Equity investors realise a return by selling their share of the company for more than their original investment. Loans are returned by regular repayment at agreed interest rates. Debt investments are nearly always secured against assets within the business, but equity investments are only rewarded by the resultant ownership of the company. Thus, equity investments are seen as higher risk than traditional debt finance. The higher the risk of the investment the greater return sought by the investor. In practice most investment deals combine both equity and debt. What about grants? These are state-funded donations with no repayment requirement, awarded according to strict criteria and aimed at supporting and/or stimulating partic
