If you know anything about business, you know both entrepreneurs and investors risk their money so they can make a profit in the future. Even with this similarity, there are a lot of differences between the two. This article will discuss the main differences, so keep reading if this is something you are interested in.
Investors are people who put their money into different things including businesses, bonds, foreign exchange, and more so they can earn a return on their investment. Investors will do this to make money on the growth of what they have backed (invested in). For example, an investor will put money into the stock of a business and profit when they sell the stock at a higher price.
An entrepreneur comes up with a business idea (often backed by a product, service, or innovation) and then takes the risk of starting a business to profit from their product, service, or innovation. Entrepreneurs will often have a vision, can spot market gaps and opportunities, and know how to take advantage of both.
A major difference between an entrepreneur and an investor is that the entrepreneur starts a business to make a profit, while an investor backs or invests in one to do the same. The investor does not have to develop new business ideas and instead relies on entrepreneurs to do so.
An investor will back a business using their money and then sit back and wait for a profit. An entrepreneur, on the other hand, invests much more than money. They also have to invest their time, ideas, and skills they have learned along the way.
Even with their different investments, they cannot do without each other; entrepreneurs need investors’ funds to start businesses, and investors need entrepreneurs with good ideas and businesses to invest in.
Where They Focus
Another difference between the two is the areas they focus on. The investor will mainly focus on the financial health of the business, while the entrepreneur has to think about the whole business. Their concerns can range from customer acquisition and retention to marketing and idea creation.
Looking at the differences between entrepreneurs and investors described above, we can see both of these people possess different skills that make them successful in businesses or investments. However, some professionals have mastered the art of both, and they are known as entrepreneurial investors.
Entrepreneurial investors will usually have a lot of success in the business world, have grown in the corporate world, and have a lot of experience in business, usually international business, before starting their own businesses. A great example is investor Rami Cassis who has extensive experience in different industries before heading a private equity firm. Entrepreneurial investors will also usually be serial investors or serial entrepreneurs, meaning they do not invest in, start, or run single businesses.
There are major differences between investors and entrepreneurs, and you can look at either to see which role would suit you better. There are also entrepreneur investors who straddle the roles of both entrepreneurs and investors.