Guide to Early Stage Investing, Investors, & More
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
What Is the Early Stage of a Business?
How Does Early Stage Investing Work?
Notable Early Stage Investors
Hubble network SpaceX SpaceForge
Future Planet Capital
23andMe Igloo CellCentric
Responsibly Nexgen .planetly
Rage Coffee Bold Care The Healthy Company
CryptoAvatars Kima Superworld
Pros and Cons of Being an Early Stage Investor
If the early-stage business is successful, you could end up seeing a significant return on your investment. Investing in a startup is a way to support entrepreneurship and help promote innovation. Investing in an early-stage company can be an exciting and rewarding experience, since startups often have passionate teams that are willing to work hard to make their business succeed.
There’s a relatively high risk of failure. Many startups don’t make it, so you could end up losing your investment. Being an early investor requires work – you may have to help the company with strategic decisions or provide mentorship. New startups typically require a lot of funding, so you may have to invest a significant amount of money upfront.
Pros and Cons of Early Stage Investors for a Business
Early-stage investors can provide the funding you need to get your company to the next level. Equity financing generally does not come with any fixed repayment requirements. (There is an expectation of an investment return, but the return is generally expected five to 10 years in the future.) Early-stage investors can often provide valuable business expertise and connections that can help you build and grow your business.
Bringing in an early-stage investor typically requires a valuation of your company, which can be difficult if you don’t yet have steady revenue streams or assets. Early-stage equity financing involves giving up some ownership of – and control over – your business. In fact, you could end up owning a small percentage of your business after a few rounds of fundraising. Access to this kind of capital is limited and often requires connections.
Comparing Early Investors, Angel Investors, and Venture Capitalists
3 Small Business Loan Tips
Generally, it can be easier for entrepreneurs starting out to qualify for a loan from an online lender than from a traditional lender. Lantern by SoFi’s single application makes it easy to find and compare small business loan offers from multiple lenders. If you are launching a new business or your business is young, lenders will consider your personal credit score. Eventually, though, you’ll want to establish your business credit. SBA loans are guaranteed by the U.S. Small Business Administration and typically offer favorable terms. They can also have more complicated applications and requirements than non-SBA business loans.
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