Source - https://www.aaronkharris.com/investors-and-their-incentives

TL;DR - Founders should be mindful of the different goals and incentives driving each type of investor they might encounter.

Helpfulness - 5

Tags - investor mindset, incentives, vc structure, range of investors

Questions addressed:

• What are the different types of investors that founders are likely to encounter?
• What motivates each of these investor groups?
• How are investor-founder relationships structured in each case?

Summary:

• Classic VCs invest LP money to earn management fees and, more important, a percentage of investment profits.
  • Incentivized to get a big return on investment / multiple.
• Angels invest their own money directly, and fall on a spectrum from knowledgeable ex-founders to inexperienced wealthy people.
  • Often simply motivated by a desire to invest in a startup, regardless of outcome.
• Also covers accelerators, syndicates, crowdfunders, family/friends, family offices, corporate investors (direct and through venture arms), governments, endowments, seed funds, hedge funds, mutual funds, and sovereign wealth funds.

Follow up links:

• More on investor incentives, http://paulgraham.com/swan.html

LP definition,

https://www.investopedia.com/terms/l/limited-partner.asp