One stereotype of start-ups is that they begin in garages.
2. Direct investments in start-ups and private companies. Investors can directly invest into start-ups and private companies as opposed to investing in a private-equity fund. Investing seed capital directly in start-ups is sometimes referred to as angel investing. This is a high risk and high return strategy for investors as many start-ups end up failing. A private company will seek investors through a private placement based on a certain valuation. Retail investors can participate in some offerings depending on the type of registration exemption the company relies upon. Companies seek investment capital throughout their life cycles', so more mature companies can also be targeted for investment.