Who are investors, or where does the money for business come from

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The modern world is simply unthinkable without a full-fledged commodity-money turnover. It goes without saying that any material relationship must be regulated by certain rules and people. Therefore, in this article, we will learn in detail about who investors are, what is their role in international financial relations and the impact on the economic development of various enterprises.

Definition

We note right away that today the global trend is such that not a single promising project will receive proper development without the involvement of certain financial figures.

So, who are investors? According to the accepted terminology, these are persons (both individuals and legal entities) who invest their own money in various projects with the sole purpose of obtaining the maximum profit for themselves.

Empowerment

Attracting investors gives a person a chance to take his business to a new, higher level. In addition, in order to better understand who investors are, it should be noted that the money they allocate is most often used to expand, for example, production capacities,modernization of technologies and equipment, staff training, research activities.

Investment sources

You can get money today to complete your scheduled tasks:

• in a banking institution;
• in a venture fund;
• from a private investor.

We will consider each of these points in detail.

First of all, we note that any bank is a repository of a large amount of money, but this does not mean at all that its owner will scatter them in all directions. It is important to understand that bankers in their investments seek to avoid risk as much as possible. To this end, they impose very stringent requirements on their borrowers.

Absolutely all banks act as an investor only under the condition of a stable financial position of a company trying to borrow money. Often, a banking institution requires you to provide collateral or repay a loan with a certain percentage. At the same time, bankers are closely studying the documentation, and if there is even the slightest doubt about the solvency of the client, then the issuance of money will be denied.

Venture funds stand apart among investors. They are the easiest to attract to invest in innovative projects.

In turn, private investment is possible only when a particular person sees his personal interest in a particular activity and understands that thanks to it, the invested money will return with a profit. Strictly speaking, each such investor is chosenindividually depending on the direction of business. At the same time, the client will be obliged to provide either a business plan or technical and economic calculations, on the basis of which the rationality of further cooperation between potential partners will be determined. But in any case, getting private investments is much easier than negotiating with a bank or a venture fund.

Securities market

This segment of the global money market is also saturated with various actors. We will note such a character as a financial investor. The main task of this individual or legal entity is to earn as much as possible, using their investment portfolio and a well-thought-out own strategy for this. Let's get acquainted with the data types of contributors.

• Aggressive investor. They are driven by the desire to achieve maximum profit. Very often, he invests in new, completely unexplored projects that can bring fame and huge income in the future. At the same time, the risk is very high.
• Conservative investor. Its main goal is to make a profit on the basis of calculated investments. He never pursues the maximum, but strives for the reliability and security of the deposit.
• Moderate investor. There is always a balance between adventurism and logic in his investment portfolio. Very often he purchases government securities, shares of the most famous and very stable corporations and companies.

Profit Sharing

Every business has its nuances. In this regard, one should not think that the money allocated for the development of an enterprise or business is given just like that. All investor companies strive only to receive the maximum possible dividends. Although there are examples when the borrower literally "clamps" money for interest payments. Thus, based on the S&P 500 list, such global giants as Berkshire Hathaway, Google and Apple are not too eager to share profits with their investors, and this despite the fact that they cannot be called unprofitable. According to experts, if these companies turned their faces to their shareholders and began to pay a little more money than now, then the value of the shares of these titans of the market of new technologies would increase significantly.

We hope that thanks to this article it became clear to you who investors are and why they exist.