There are four types of private investors:
- Friends and family: they are often the first private investors that start-ups and small businesses turn to. They’re a great resource for seed funding, as friends and family already have that base of trust and involvement that founders usually have to build.
- Angel investors: they are wealthy individuals who invest in start-ups, usually at the early stages. Sometimes angel investors pool their money with other angel investors, forming an investor pool in order to limit their exposure.
- Venture capitalists: they are usually formed as limited partnerships where the partners invest in the VC fund together with other private investors or institutional investors.
- Private equity firms: they are private investors, but more associated with growth capital than with start-up capital.
The typical key characteristics of such private investors who invest directly in start-ups are the following:
- Current or former business executive of a large enterprise
- Entrepreneur or former entrepreneur
- Familiar with entrepreneurial risks
- Interested in innovation and research
- Interested in active involvement and in sharing know-how
- Already invested in private companies
- Has the necessary financial risk-bearing capacity
Private investors are typically high net worth individuals who look to put relatively small amounts of money into start-ups.
Angels are often one of the more accessible forms of early stage capital for an entrepreneur and as such are a critical part of the equity fundraising ecosystem. There is no real limit on what a single angel investor can invest, but most of the time between CHF 50’000 to 5 million, although most investments tend to cap out around CHF 500’000.
Angels may also invest incrementally, offering founders a small investment at a first round with the opportunity to follow up at a later stage with additional investment, typically when something important happens with the business.
At UBS, we created the Private Investor Circle initiative in order to support fast growing companies based in Switzerland, but also to give UBS Wealth Management clients residing in Switzerland access to exclusive direct investment opportunities in Swiss fast-growing companies as an alternative investment possibility.
To be eligible to become member of the UBS Private Investor Circle, the private investor has to be a UBS client, have a Swiss residence and be qualified as a professional investor according to the FIDLEG/FinSA regulation. This ensure that the private investor is able to perform their own Due Diligence and take their own independent investment decision.
UBS Growth Advisory