Greed or Fear: What Really Motivates Investors

This article was written by Asheesh Advani of Entrepreneur.com. Asheesh is Entrepreneur.com's"Start-up Financing" columnist and president of CircleLending, a financial services company that facilitates loans among friends, relatives and business associates.

Over the course of building my business, I've raised money from many different types of investors: venture capital firms, small investment firms, wealthy angel investors, angel groups, private lenders, and relatives and friends. I've seen first-hand how greed and fear sometimes motivate investors to behave in irrational ways.

Learning more about these motivations can not only help you raise money, but also help you better manage your investors and understand the human side of financing a start-up.

For this column, I'm going to focus on two significant financial resources: venture capital firms and angel investors. When I was younger, I was told venture capital firms invest out of fear (losing the deal to another firm) and angels invest out of greed (making more money than their friends). I've come to learn this is a gross oversimplification. ...