The Different Types of Startup Investors

Finding the right investors for your startup is essential to achieving sustainable growth and long-term success. From informal support networks to established equity investors, each type plays a vital role in meeting different funding needs. However, not all investors are created equal. For this reason, understanding their motivations, what they look for and how to engage them is key. This guide delves into various investor types, highlighting where startups can find them and how they fit within the broader fundraising landscape.

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Different Types of Startup Investors

Startup Investors are not a one-size-fits-all solution. Their goals, risk tolerances and involvement levels vary widely, meaning founders must tailor their approach when seeking funding. Whether starting with personal networks or aiming for sophisticated institutional capital, knowing when and where to target specific investors is crucial for raising the right type of capital at the right time.

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Individual Investors

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Angel Investor

Angel investors are wealthy individuals who fund startups in exchange for equity, typically during the seed or early growth stages. Unlike friends and family, angels bring both capital and strategic value through mentorship, industry connections and business acumen. They are often willing to take risks on unproven ideas, making them key supporters of innovative ventures.

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Startups can connect with angel investors through dedicated angel networks, pitch events or specialist fundraising services. There are also various online platforms offering access to a broad range of angel investors. Building trust and showcasing a viable business model are critical to securing angel investment, as these investors prioritise scalability and strong teams.

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High-Net-Worth Individual Investor

High-net-worth individuals (HNWIs) are private investors with significant personal wealth who often invest £250,000 or more into startups. Unlike retail investors, they typically have a more sophisticated understanding of financial markets and can provide both substantial capital and strategic value. HNWIs are often keen to invest in sectors they are familiar with, seeking both financial returns and the opportunity to contribute their expertise.

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Startups can connect with HNWIs through investment clubs, angel networks or by leveraging the networks of professional fundraising services. HNWIs often prefer opportunities with clear growth potential and may require detailed business plans, financial projections and a well-articulated market strategy.

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Friends and Family Investor

The early stages of funding often begin with friends and family investors - typically, close acquaintances who provide capital based on personal trust rather than formal business metrics. Their contributions, typically modest in size, help founders cover early expenses like developing prototypes, refining business models or validating market potential before seeking external funding. Although informal, this initial capital can serve as a critical launchpad for startups aiming to demonstrate early traction and viability.

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However, reliance on personal networks has its limits, especially as startups scale and require more structured funding. Friends and family investments may not suffice for high-growth needs, leading founders to explore formal equity-based funding options. ThatRound supports this transition by connecting startups with services such as online platforms, investor syndicates and angel networks.

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Retail Investor

Retail investors, often individual investors who invest their personal funds, provide startups with smaller yet valuable capital injections. Unlike institutional or professional investors, they are less focused on controlling equity or operational influence. Retail investors typically seek innovative products, scalable growth or investment opportunities offering potential returns through equity or convertible notes.

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These investors can be accessed via crowdfunding platforms, which pool contributions from multiple small investors globally or investment clubs that allow groups to collectively fund promising startups. By leveraging partners on platforms like ThatRound, founders can widen their reach efficiently.

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Institutional Investors

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Family Office

Family offices manage substantial private wealth for high-net-worth families and often allocate a portion of their portfolio to startup investments, favouring long-term returns over short-term gains. Unlike traditional investors, family offices are known for their flexibility, sector-specific focus and mission-aligned investing, such as in sustainability or technology-driven ventures. They can provide strategic, patient capital, making them ideal for startups aiming for steady growth rather than rapid scaling.

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Accessing family offices often requires targeted networking through wealth management firms, private investment clubs or referrals within trusted circles. ThatRound’s platform connects startups with suitable services, such as institutional brokers and fundraising advisors, to facilitate introductions and enhance visibility with family offices that may be potential investors.

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Venture Capital Firm (VC)

VCs are institutional investors that specialise in high-growth companies with scalable business models. These firms typically provide significant capital in exchange for equity and are heavily involved in guiding startups, offering mentorship, industry expertise and strategic connections. VCs are structured to deliver high returns within specific timelines, often seeking fast-growing startups in sectors like technology, fintech or healthcare. Their involvement often begins at the Series A stage or later, but some will focus on seed and pre-seed.

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Startups looking for venture capital can target pitch events, demo days and accelerator programmes. Engaging professional help such as a specialist fundraising advisor or institutional broker is typically required.  A variety of these different services are offered on ThatRound’s aggregator and marketplace platform. Understanding a VC’s focus and investment criteria is critical, as they prefer businesses demonstrating traction, a strong founding team and clear growth projections.

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Strategic Institutional Investor

Strategic institutional investors include large organisations like corporates, financial institutions or sovereign wealth funds. These investors seek strategic alignment with their existing portfolios or operational goals, often investing in sectors where they have expertise or business interests. Unlike VCs, strategic institutional investors may pursue partnerships or collaborations beyond financial returns, providing market access or supply chain benefits.

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Startups can approach these investors through direct applications, strategic partnerships or introductions facilitated by institutional brokers and professional fundraising services. Large corporates may also have dedicated investment arms scouting for innovation. Using platforms like ThatRound to identify fundraising services specialising in institutional capital ensures startups connect with suitable strategic investors.

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Other Investors

A range of other investors, such as private equity firms, hedge funds and pension funds, also exist. They tend to cater to later-stage startups or established companies. Private equity firms typically acquire controlling stakes in businesses to optimise their operations and profitability. Hedge funds often seek high-risk, high-reward opportunities, while pension funds prefer stable investments with long-term potential.

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Startups seeking capital from these sources should demonstrate mature operations, strong financial performance and scalable business models. Access points include institutional brokers, corporate finance networks and strategic partnerships. ThatRound’s partnerships with brokers and capital advisory services can simplify introductions to these large-scale investors, ensuring startups gain visibility where it matters.

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How Investment Stages Work

Funding a startup typically involves navigating a series of investment rounds, each generally aligned with different growth milestones. However, these stages are not always formal or fixed; many startups adjust their funding strategies based on evolving business needs, market conditions and unforeseen opportunities. From pre-seed to late-stage funding, each round brings unique investor expectations, valuations and risk profiles. Founders must balance timing their fundraising efforts with targeting investors whose interests align with their current growth stage. Understanding the flexible nature of funding rounds is essential to securing sustainable capital without risking over-dilution or premature scaling.

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Basics of Funding Rounds

Funding rounds offer startups opportunities to scale operations, attract new investors and validate business growth, but the structure of these rounds can vary significantly. Rather than following a rigid path, many startups find themselves adapting their funding approach as they pivot or respond to new market opportunities. While pre-seed funding often focuses on product development and market validation, later rounds—such as Series A, B and C—tend to emphasise scalability, market penetration and profitability. Recognising that these stages can be fluid helps founders build a more resilient and adaptable fundraising strategy, enhancing their ability to secure capital that aligns with their long-term vision.

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Pre-Seed Funding

‍Pre-seed funding is often the most challenging stage to secure, as startups are usually pre-proof of concept and lack the essential metrics that later-stage investors expect. At this stage, founders typically rely on personal savings, friends and family, or angel investors for capital. The primary goal is to validate the basic concept and build an initial prototype. However, pooling investments from multiple smaller investors can be a complex and time-consuming process, requiring significant effort in managing communications and expectations.

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ThatRound simplifies this stage by aggregating a wide range of early-stage funding services into one platform. By providing an investor CRM and round management tool, ThatRound helps founders manage multiple investor relationships efficiently, ensuring they can focus on developing their product rather than getting lost in administrative tasks.

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Seed Funding

Once a startup has validated its concept, seed funding is used to accelerate product development, expand the team and execute go-to-market strategies. Angel investors and early-stage VCs often participate in this round, with valuations still relatively modest but higher than pre-seed. Seed funding is critical for building an MVP, acquiring early customers and proving market demand.

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By connecting startups with a curated selection of fundraising services, ThatRound enables founders to access capital from investors who specialise in early-stage funding. The platform’s streamlined approach reduces the complexity of managing multiple investor relationships, making it easier for startups to secure the funding they need to scale.

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Series A Funding

Series A funding is often the first major round of institutional financing for startups, bridging the gap between initial seed capital and large-scale growth. This stage focuses on scaling proven business models, enhancing customer acquisition and expanding operational capacity. Investors seek startups with validated products, early traction and measurable growth potential. Funding here enables product development, larger marketing campaigns and the refinement of revenue streams. To secure Series A, founders must demonstrate key performance metrics, including customer retention, revenue growth and market scalability.

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Series B and C Funding

Series B and C funding rounds focus on scaling operational success into market dominance and preparing for potential exits such as IPOs or acquisitions. By this stage, investors expect consistent revenue growth, a scalable business model and a clear strategy for expansion. Series B funding is typically used to enhance infrastructure, expand teams and support marketing efforts aimed at broadening market presence. Series C funding builds on this by enabling major expansions, acquisitions and technology upgrades to secure competitive advantages. At these stages, capital often comes from venture capital firms, private equity, hedge funds and strategic investors seeking high-growth opportunities.

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Which Investors For Your Startup’s Stage?

Successfully navigating the investment landscape requires a deep understanding of which investors align with your startup’s specific growth stage. Whether you’re seeking initial funding or large-scale investments, targeting the right type of investor maximises capital efficiency and long-term returns while reducing risks associated with misaligned funding sources.

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Pre-Seed and Seed Stages

Pre-seed and seed rounds focus on validating the business idea and demonstrating early potential. Investors seek proof of concept, a dedicated founding team and preliminary market research or product prototypes. Capital raised during these stages is typically used for product development, market validation and initial operations. Friends and family, angel investors and crowdfunding platforms are ideal funding sources. Early introductions to angel networks and investment services available through ThatRound’s partner network allow startups to secure relevant resources efficiently.

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Series A

At the Series A stage, startups must demonstrate a viable, scalable revenue model, strong market demand and early traction in the form of users or sales. Investors, mainly venture capital firms, focus on funding growth through market expansion and product refinement. Series A financing often supports hiring specialised talent, expanding marketing efforts and refining operational strategies. Founders can benefit from leveraging early strategic partnerships to attract investors, offering proof that collaborations are scalable.

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Series B and Beyond

Series B rounds focus on scaling operations, market penetration and optimising processes for sustained growth. Startups seeking Series B funding must show stable revenue streams, solid customer bases and clear paths to profitability.

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Later stages—Series C and beyond—require more robust performance metrics and clear exit strategies. Institutional investors and corporate partners become key players, often contributing larger investments. With ThatRound’s partners, including institutional brokers, startups can access tailored services for securing major investments or preparing for potential acquisitions or public offerings.

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Strategic selection of investors ensures that startups gain not only capital but also valuable resources and expertise for sustainable growth.

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Investors in Specific Sectors

Startup investment strategies can vary widely based on the sector in question, with certain industries like healthcare, clean energy and advanced manufacturing attracting specialised investors. Regulated sectors, such as pharmaceuticals or financial services, involve compliance milestones, making investors with regulatory knowledge or government connections vital. For example, healthcare investors often require startups to demonstrate clinical trial progress or approvals from regulatory bodies like the MHRA in the UK.

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Many sector-specific public sector programmes collaborate directly with investors to foster innovation. Innovate UK, a government-backed body, offers grants and co-funding to startups in sectors such as advanced materials, digital innovation and life sciences. Horizon Europe, the EU’s primary R&D funding body, provides significant investment for startups in technology, sustainability and scientific research. Such programmes often align with investors who prioritise innovation-driven industries, making partnerships with these entities beneficial for success.

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Many sector-specific investors are only accessible through the right connections, making it challenging for founders to reach them directly. That’s why our platform helps startups connect with fundraising services that have these networks, ensuring founders can target relevant opportunities within their industries. By guiding startups through the process of engaging with angel networks, crowdfunding platforms and investor syndicates, ThatRound enables founders to discover partners that align with their industry focus. 

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Location-Specific Investors

Government bodies, regional innovation funds and local development agencies often collaborate to provide location-specific funding aimed at creating jobs, improving infrastructure or enhancing local technological capabilities. For instance, New Anglia Capital, which focuses on startups based in Norfolk and Suffolk, connects founders with regional funding opportunities to support high-growth potential businesses. Similarly, HBAN (Halo Business Angel Network) in Ireland operates as an angel investment platform, helping early-stage startups access capital from sector-specific investors.

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By connecting startups with fundraising services that can facilitate introductions to these types of investors, ThatRound simplifies the process of accessing regional funding aligned with a startup's sector and growth stage.

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These regional programmes often provide grants, co-investment schemes and equity funding designed to support early-stage development and scaling. Startups can typically access these opportunities by collaborating with local accelerators, innovation hubs, angel networks or business development councils. ThatRound acts as a gateway for startups to access fundraising services that can facilitate co-investment opportunities with region-specific investors. By connecting startups to services like Anglia Capital Group, which offers co-investment funds and access to grants, ThatRound simplifies the path to securing the right financing without the inefficiencies of reaching out to individual investors independently.

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Incubators and Accelerators

Incubators and accelerators play an instrumental role in supporting early-stage startups, providing access to mentorship, infrastructure and networks essential for growth. While they are often mentioned together, their functions vary. Incubators focus on nurturing startups during the idea or pre-launch stage, offering long-term support with workspace, business development advice and access to essential resources. On the other hand, accelerators cater to startups with established prototypes or early traction, delivering short, intensive programmes aimed at rapid scaling, market penetration and investor readiness.

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Both incubators and accelerators operate through structured programmes. Participants undergo training in core areas, such as product development, marketing strategy, legal compliance and financial management. In exchange for equity or fees, startups receive mentorship from experienced entrepreneurs, investors and industry leaders. These programmes often culminate in a demo day or pitch event where founders present their businesses to potential investors. Many programmes also provide seed funding to help startups achieve their first growth milestones.

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Startups can find incubators and accelerators through industry associations, startup ecosystems or government-backed initiatives. Regional tech hubs like Silicon Roundabout in London or Tech City in Manchester house prominent programmes and international accelerators like Y Combinator and Techstars often have virtual cohorts open to startups globally. Networking at startup conferences and using platforms like ThatRound can also connect founders to incubators or accelerators suited to their business model and sector.

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When evaluating if an incubator or accelerator is right for you, consider your startup’s current stage and funding needs. If you’re at the ideation phase and need prolonged guidance, an incubator may be ideal. For startups seeking fast growth and immediate investor connections, accelerators offer high-intensity programmes to achieve quick results. Be mindful of equity arrangements, as some programmes require significant stakes in exchange for access and funding.

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How ThatRound Makes Finding Investors Easier

Raising capital for a startup is one of the most significant challenges founders face. Identifying, connecting with and pitching to investors requires not only substantial time and effort but also a deep understanding of the fundraising landscape. ThatRound simplifies this process by offering a centralised marketplace that connects startups with vetted fundraising services. Rather than navigating a fragmented and often inefficient market, founders can leverage ThatRound to efficiently assess, compare and engage with services that align with their growth stage, sector and investment needs.

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Credible, Verified Partners

ThatRound connects startups to a network of credible and pre-vetted fundraising services, ranging from angel networks and crowdfunding platforms to institutional brokers. Each service partner is assessed for its ability to offer strategic, sector-specific support, ensuring founders can engage with services that genuinely add value. By eliminating unreliable or unsuitable options, ThatRound enables founders to focus their efforts on partners that can facilitate meaningful investor connections. This approach reduces the risks and inefficiencies typically associated with early-stage fundraising, providing a faster path to securing capital.

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Service Comparison Tools

Choosing the right fundraising service requires more than just knowing what’s available - it demands a structured evaluation of cost structures, investor types and sector specialisation. ThatRound’s service comparison tools allow founders to assess fundraising services side-by-side based on key criteria such as fees, stage suitability and investment focus. Founders can quickly filter options, ensuring they only engage with services that match their specific funding needs and business model. By removing guesswork, ThatRound streamlines the decision-making process, helping startups allocate resources more efficiently and secure the right capital faster.

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Investor Filtering

ThatRound’s investor filtering tools help startups target services that can connect them with the most relevant investors. By categorising services based on investor type, such as angel investors, venture capital firms and institutional backers, founders can focus on opportunities that align with their growth stage and industry focus. This targeted approach maximises the chances of securing meaningful investment, allowing founders to spend less time on unsuitable leads and more time on refining pitches and building relationships with the right investors.

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Unified Legal Framework

Legal complexities often create bottlenecks in the fundraising process, with startups needing to navigate multiple contracts, compliance requirements and due diligence. ThatRound addresses this issue by offering a unified legal framework that standardises engagement with fundraising services. This approach minimises legal friction and accelerates deal closures by providing pre-vetted agreements and consistent legal processes across all partnered services. Founders can move forward with confidence, knowing that they are operating within a streamlined and transparent legal framework that reduces the risks of misalignment or prolonged negotiations.

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Conclusion

ThatRound transforms the fundraising journey for startups by centralising access to credible fundraising services, simplifying legal complexities and providing structured tools for comparing options. By leveraging these resources, founders can focus less on administrative hurdles and more on securing the right capital to drive their business forward. With ThatRound, the path to investment becomes simpler, faster and more efficient.

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