My Seven Types Of Investors

Joshua Reeves – the co-founder and CEO of Gusto – describes Silicon Valley as “entrepreneurs helping other entrepreneurs.”

David Beisel (of Next View Ventures) breaks it down further. In a recent blog post about Silicon Valley’s different angel types, he calls Reeves’ entrepreneurs “Fellow-Entrepreneur Angels.”

That’s just one of 10 types he has identified.

The other nine?

They’re The Super Angel. The Domain Angel. The Previous-Colleague Angel. The Friends & Family Angel. The Grouped Angels. The “True Believer” Angel. The Financial Angel. The “Sport Fisherman” Angel. And The Foolish Angel.

(I recommend reading the entire article. You can do so right here.)

It took years for these groups to take shape.

Now that we’re at the dawn of equity crowdfunding, it’s hard to say what types of investors will emerge in this space. But – inspired by Beisel’s blog – I’ve put together a list of seven crowdfunding investor types I’m envisioning…

1. Early Adopters

They’re coders and gamers and love new technology. Clever gadgets excite them. They read wired.com.

And whether it’s driverless technology, robots and drones, machine learning or virtual reality, they basically know what’s coming down the pike.

But remember this: A startup attracting early adopters (easier) and one developing a mass consumer base (harder) are two different things.

Early adopters can get carried away. Yet they’re worth paying attention to. This group put the kibosh on Google Glass and went ape over GoPro cameras. They’ll surely have an influential role to play in equity crowdfunding.

2. Product Users

They’re bound to become the largest group because companies will find the prospect of raising from their own customers irresistible. Imagine this: Your favorite beer comes from a small craft brewing company. You rave to your friends about it. The ones who try it also love it. And you now have the opportunity to invest at one-thirtieth the price of Boston Beer Company (Sam Adams).

We’re going to see this kind of scenario repeated hundreds of times with all kinds of consumer items. Sure, your taste isn’t impeccable. Sometimes it will let you down. Or the company’s product might be better than its execution. But using and liking a product is a good place to start.

3. Fugitives From Kickstarter and Indiegogo

I have nothing against reward-based crowdfunding sites. But I hope all the Kickstarter and Indiegogo visitors start investing on equity crowdfunding sites like Wefunder or SeedInvest.

The Oculus Rift example says it all. It raised $2.4 million on Kickstarter. In return, people got some nice discounts. Some 19 months later, Facebook bought Oculus for $2 billion. Lesson: If you believe in a product enough to donate money, make an equity investment instead!

4. Fun/Curiosity Seekers

It’s new. There are a lot of exciting companies. The financial rewards can be incredible. And it costs as little as $100 to invest. Why not have fun with it?

5. Experienced Investors Who Do Crowd Investing Regularly

They see the potentially outsized rewards and believe they can manage risk (right on both counts). So they’re all in. They’ll do their research and invest only in impressive founders and doable growth strategies. And then they’ll build large diversified portfolios.

I know many accredited investors who take this approach. I’m convinced I’ll see the same type of investor emerge in the crowdfunding space.

6. Experienced Investors Who Do It Intermittently

This group makes me nervous. They’re as serious as the above group about making money but not as committed to the space. Startup investing is very different. And as “non-fun-seekers,” they’re not going to take their setbacks lightly. They should seek third-party expertise and/or follow the early adopters. But will they?

7. Moneyed Investors

This category will start small and gradually grow as time goes by. At first, these wealthy investors won’t believe that deal flow in the equity crowdfunding space is worth their time and money. They’re in for a surprise. Even in these extremely early days, I’m seeing several exceptional startups raising under Title III and Regulation A+.

What type are you? It’s definitely worth giving it some thought.