Greed or Fear: What Really Motivates Investors

For wealthy investors, there's a benefit in being able to tell their friends and relatives about how they've put some money in a start-up venture with an intriguing business model. There's nothing shameful about bragging rights; it's an understandable and real part of the motivation of investors -- something you should remember when pitching them.

Angel investors also like to live vicariously through entrepreneurs, many being former business owners themselves. The Global Entrepreneurship Monitor studied the backgrounds of angel investors and found that these individuals are predominantly male, former business executives with previous entrepreneurial experience and a high net worth.

The extent to which the investor understands your product and has had previous exposure to your industry is among the most important factors in determining if they'll invest in your company or pass on the deal. Greed is only part of their motivation.

For many investors, their decisions are based on more than merely making money. The better you understand some of their typical motives, the better you'll be able to pitch your business -- and work with them once they've signed on.