How to Find Private Investors
Private investors include PE firms, high net worth individuals (HNWIs), and family offices. They invest in mature businesses with $5M+ revenue typically. Different requirements than startup investors who focus on growth potential. Private investors evaluate profitability, operational stability, and improvement opportunities.
Types of Private Investors
Private equity firms: Invest in mature businesses ($5M-$500M+ revenue). Require controlling stakes (51%+ typically) and operational involvement. Timeline: 3-6 months from contact to closing. PE firms provide operational expertise and capital. They plan exits (3-7 years) through sale, IPO, or recapitalization. Different from VCs who focus on growth-stage startups.
High net worth individuals: Invest across asset classes with flexibility. Typical investments: $100K-$10M. Require strong relationships and personalized approaches. Less structured than institutional capital. HNWIs may invest based on personal interest or impact, not just financial returns. Direct access difficult without intermediaries. Timeline: 6-12 months relationship building.
Family offices: Manage wealth for families ($100M+ net worth typically). Invest across private equity, real estate, startups, and alternatives. Long-term focus (5-10+ years). Flexible structures. Investment sizes: $2M-$50M+ typically. Access through wealth managers, advisors, or intermediaries. See our HNWI guide for family office details.
What varies: Private investor types differ significantly in: deal sizes, investment criteria, structures, and access methods. PE firms require controlling stakes. HNWIs are more flexible. Family offices have long-term focus. Match investor type to business needs and stage. Wrong investor type wastes time and damages reputation.
What Private Investors Evaluate
Revenue thresholds: Most require $5M-$50M+ annual revenue. Below this, consider business investors (SBICs, CDFIs) or startup investors (VCs, angels). Revenue thresholds vary by investor type: PE firms typically $5M-$50M+, HNWIs may accept lower ($1M-$5M) with strong growth, family offices typically $5M-$20M+. Growth rate matters: 20%+ annually attracts more interest than 5-10%.
Profitability requirements: Path to profitability or current profitability required. PE firms focus on EBITDA margins (10-20%+ typical). HNWIs may accept unprofitable businesses with strong growth potential. Family offices evaluate profitability potential. Unprofitable businesses without clear path get rejected by most private investors. Show profitability or clear path to profitability.
Market opportunity: Growth potential in existing market, operational improvement opportunities, or add-on acquisition potential. Private investors want businesses they can improve and scale. Small markets or declining industries reduce interest. Large markets with growth potential attract more investors. Show market opportunity and growth potential.
Management team: Strength and depth critical. PE may replace underperformers or add management. HNWIs may accept weaker teams if business is strong. Family offices evaluate team quality. Weak teams reduce investor confidence. Show strong management team or willingness to accept investor management changes.
Operational improvement potential: PE firms identify improvements: cost reductions, efficiency gains, revenue growth, or add-on acquisitions. HNWIs may focus on different improvements. Family offices evaluate long-term improvement potential. Show operational improvement opportunities. Investors evaluate how they can improve business operations and returns.
What varies: Evaluation criteria differ by investor type, deal size, and industry. PE firms focus on operational improvements. HNWIs may focus on personal interest. Family offices focus on long-term value. Research investor-specific criteria before outreach.
Differences from Other Investor Types
vs. Venture Capital: Private investors want profitability, not just growth. Require larger, more mature businesses ($5M+ revenue vs. VCs accepting $1M+ with high growth). Longer hold periods (3-7 years vs. VCs 5-10 years). Operational involvement (PE) vs. strategic guidance (VCs). Control requirements (PE requires control, VCs may accept minority). Different exit expectations and timelines.
vs. Banks: Equity not debt. Active involvement (PE) vs. passive lending (banks). Higher returns expected (15-25% IRR vs. 5-10% interest). Longer timelines (3-6 months vs. 1-2 months for banks). Different requirements: profitability vs. cash flow, operational improvements vs. collateral. Equity provides flexibility but requires giving up ownership.
vs. Business Investors: Private investors focus on larger businesses ($5M+ vs. $100K-$1M for business investors). More capital available ($5M-$100M+ vs. $250K-$5M for SBICs). Different structures: controlling stakes vs. minority investments. Operational involvement vs. passive capital. Match investor type to business size and needs.
Deal size variations: PE: $5M-$100M+. HNWIs: $100K-$10M. Family offices: $2M-$50M. Match deal size to investor type. Wrong size wastes time. Smaller deals work for HNWIs. Larger deals work for PE or family offices.
Timeline differences: PE: 3-6 months process. HNWIs: 6-12 months relationship building. Family offices: 3-6 months process. Banks: 1-2 months. VCs: 2-4 months. Set realistic expectations. Private investors take longer than banks but provide more capital and flexibility.
What varies: Differences depend on investor type, deal size, and business needs. PE differs significantly from HNWIs. Family offices differ from both. Research investor-specific differences before outreach.
Finding Private Investors
PE firm databases: Crunchbase, PitchBook list firms by industry, deal size, and focus. Use for research and targeting. See our PE guide for detailed strategies.
HNWI networks: Wealth managers, private banks, CPAs, attorneys maintain HNWI relationships. Building relationships with professional advisors improves access. See our HNWI guide for access strategies.
Family office associations: Family Office Association, Family Office Exchange provide networking and directories. Membership requirements vary. Research associations relevant to your market.
Investment banks: For larger deals ($10M+), investment banks facilitate PE introductions. Banks provide deal structuring and due diligence support. See our PE guide for bank relationships.
Professional networks: CPAs, attorneys, consultants maintain private investor relationships. Building relationships with professional advisors improves access. Expect 6-12 months relationship building before introductions.
What varies: Access methods differ by investor type, deal size, and geographic location. PE access differs from HNWI access. Family office access differs from both. Research access methods relevant to your investor type and deal size.
Preparing for Private Investor Outreach
Financial preparation: 3-5 years historical financials, 3-5 year projections, EBITDA analysis, cash flow analysis, and key metrics. Financial accuracy critical. Errors signal poor management. Professional accounting helps. See our due diligence guide for required documents.
Business plan: Executive summary, market analysis, operational improvement opportunities, management team, and use of funds. Business plans show planning and professionalism. See our pitch deck guide for structure.
Operational improvement analysis: Cost reductions, efficiency gains, revenue growth, or add-on acquisitions. Private investors want to see improvement opportunities. Show how investors can improve business operations and returns.
Management team presentation: Bios, relevant experience, roles, and willingness to work with investors. Strong teams attract more interest. Show relevant experience and execution ability. Address experience gaps proactively.
Compliance preparation: Accredited investor verification may be required. Legal counsel essential for proper structure. See our accredited investor guide for compliance requirements.
What varies: Preparation requirements differ by investor type, deal size, and industry. PE requires more extensive preparation than HNWIs. Larger deals require more preparation than smaller deals. Research requirements relevant to your investor type and deal size.
Common Private Investor Mistakes
Wrong investor type: Approaching PE for early-stage businesses or HNWIs for businesses requiring control. Match investor type to business stage and needs. Wrong fit wastes time and damages reputation.
Insufficient revenue: Approaching private investors before reaching revenue thresholds ($5M+ typically). Below thresholds, consider other options. Building revenue first improves terms and investor interest.
Missing financials: Incomplete or inaccurate financial statements. Private investors require 3-5 years of financials. Missing or inaccurate financials = deal killer. Professional accounting helps ensure accuracy.
Unrealistic projections: Overly optimistic projections without basis. Private investors evaluate projection realism. Unrealistic projections reduce credibility. Realistic projections based on historical performance build trust.
Unclear value proposition: Not showing how investors can improve business or generate returns. Private investors want to see improvement opportunities. Unclear value propositions reduce interest. Show operational improvement potential and growth opportunities.