October 14, 2026
Startups raise money from six kinds of investors: friends and family, angels, venture capital funds, equity crowdfunding investors, incubators and accelerators. The first three fund most startups. The instrument usually depends on stage: SAFEs or convertible notes at pre-seed, preferred stock in a priced seed or Series A. Choose investors for what your company needs next, not for prestige.
Key takeaways
| Investor | Typical stage | Usual instrument | What they want |
|---|---|---|---|
| Friends and family | Idea to early product | SAFE or convertible note | To back you personally |
| Angels | Early product, first traction | SAFE or convertible note | A large return, often with a mentoring role |
| Venture capital funds | Seed through growth | SAFE at seed; preferred stock in priced rounds | Outcomes big enough to return their fund |
| Equity crowdfunding investors | Early, with an engaged community | Usually SAFEs or equity under Regulation Crowdfunding | A stake in a company they use or believe in |
| Incubators | Very early | Small equity stake | Equity in exchange for space and support |
| Accelerators | Early, with a prototype or product | Fixed percentage and/or SAFE | Equity in a cohort of fast-growing companies |
Round sizes change with the market, so check current data rather than relying on fixed numbers. See Startup Funding Stages.
Friends and family invest because they know and trust you, often when the company is just a concept, a deck or a demo. The money usually goes to forming the company, hiring contractors and building a first product. These rounds tend to be small and raised on SAFEs or convertible notes. Treat them as seriously as any other round: use proper documents, explain the risk and check whether each investor is accredited. See What Do I Tell My Friends and Family Interested in Investing? and Raising Money From Non-Accredited Investors.
Angels are wealthy individuals investing their own money. Many have built companies themselves and bring advice and introductions along with the check. They usually invest once there is a clear concept or early product, often on a SAFE. Checks vary widely, from a few thousand dollars to several hundred thousand. Super angels, who invest larger amounts and more often, can behave much like small funds. Most angels are found through warm introductions from founders they’ve backed, other investors or your own network. Angel groups pool their members and run a more formal pitch and review process, which usually means a slower decision. Before you take a check, ask about their recent investments, how involved they like to be and whether they put more money into later rounds. See SAFE. See Which Seed Investor Terms Should Make Me Walk Away?
VC funds invest money raised from institutions and wealthy individuals. They are portfolio investors: most of their returns come from a few big outcomes, so they need every investment to have a real chance of returning the fund. Seed funds write checks from a few hundred thousand dollars to a few million, often on post-money SAFEs. Series A and later funds lead priced rounds, typically buy preferred stock and often take a board seat or observer seat. See Venture Capital 101. See Should I Take a Seed Check From a VC That Wants to Lead My Series A?.
Equity crowdfunding lets a startup raise small amounts from many people, including non-accredited investors, under Regulation Crowdfunding. The offering has to run through a funding portal or broker-dealer registered with the SEC and a member of FINRA. Unlike Kickstarter-style crowdfunding, investors receive securities, not perks. It can work well for consumer companies with an engaged community, but a successful campaign takes sustained marketing and can be more work than a traditional round. See Equity Crowdfunding.
Incubators provide space, mentoring, a network and sometimes a small amount of capital to very early companies, usually for a modest equity stake. Programs are open-ended rather than time-boxed. Venture studios go further: they help create the company and often take a much larger stake at formation, so read those terms closely before signing.
Accelerators run fixed-length programs for cohorts of early companies, usually with an investment, mentoring and a demo day in front of investors. Many have entry criteria such as a working prototype. Deal terms differ by program and change over time. Y Combinator’s standard deal, for example, combines an investment for a fixed percentage with a larger SAFE. Read the current terms of each program and understand how much of the company you’ll give up before applying.
Founders increasingly see special purpose vehicles (SPVs), which pool several investors into a single line on the cap table, as well as family offices and foreign investors. Each works, but each adds paperwork: SPV documents need review, and foreign investors may need identity and sanctions checks and tax forms. Grants and government programs such as SBIR are another source of non-dilutive capital.
One warning: if someone offers to raise money for you in exchange for a percentage of what they raise, check that they are a registered broker-dealer. Paying a success fee to an unregistered finder can create real legal problems for the company and the round.
Go deeper: For a full walkthrough, see our Founder Guide to SAFEs and Founder Guide to Seed Funding.
If you’d like help with your round, see our SAFE and Series Seed services or contact us.
