Who's who in finance: whose money it is, how they get paid and who backs founders

Y Combinator says it charges no fees on the $500,000 it puts into each company it accepts. A venture fund, by contrast, charges its own investors: a $1 billion fund charging 2 percent a year produces $20 million in fee income regardless of performance, the National Venture Capital Association (NVCA) points out in its 2026 Yearbook. Each player below, from angels to banks, is set out by whose money it is, how it gets paid and whether a founder can raise from it; nothing here says whom to raise from or invest with.

NVCA's glossary defines an angel as "a wealthy individual who invests in companies in relatively early stages of development"; angel groups invest together, "individually or through a pooled vehicle", and share deal flow. In the US, only accredited investors may take part in certain securities offerings. The SEC's Investor.gov lists the main tests for individuals: income above $200,000 ($300,000 with a spouse or spousal equivalent) in each of the prior two years with the same reasonably expected this year, net worth above $1 million excluding the primary residence, or a Series 7, 65 or 82 licence. Companies in these exempt offerings need not make prescribed disclosures, and the regulator warns that "you could lose your entire investment".

Accelerators add a programme to the cheque. Y Combinator's standard deal, as viewed on 23 October 2026, is $500,000 for every company it accepts: $125,000 converts into a fixed 7%, and $375,000 goes in on an uncapped MFN SAFE whose stake is fixed at the next raise. In YC's own example, a $15M post-money cap turns that SAFE into 2.5%. YC also takes a pro rata right in later rounds and says it charges no fees, while noting that some accelerators do and that "founders should deduct those fees from the investment". Incubators, in NVCA's definition, host startups and help them control costs through "networks of contacts and shared back-office resources".

A family office invests one family's own wealth. US rules exclude it from the definition of an investment adviser if it "has no clients other than family clients", is wholly owned by family clients and exclusively controlled by family members or family entities, and "does not hold itself out to the public as an investment adviser". When it adopted the rule in June 2011, the SEC said the exclusion "does not extend to family offices serving multiple families" (Release IA-3220). Invest Europe's definition is wider: an entity serving "one or more affluent families". NVCA credits family offices with "faster decisions, smaller checks, longer time horizons than a ten-year fund life" and a choice of fund commitments or direct co-investments.

NVCA calls this "2 and 20" model standard, though top-performing funds increasingly negotiate carry of 25-30 percent and some emerging managers offer reduced fees to attract their first LPs. Across private equity, its glossary puts management fees at 0.75% to 3% of capital under management, depending on fund type and size. Investors set out their own expectations: the Institutional Limited Partners Association's Principles 3.0 say the GP should have "a substantial equity interest in the fund", contributed in cash rather than through waived management fees.

Invest Europe's definitions sort companies by maturity, not cheque size. Seed funding comes before mass production or distribution starts; start-up funding once the product is fully developed; later-stage venture tends to involve financing into companies already backed by VCs, "typically in C or D rounds". Growth equity is "often a minority investment" in relatively mature companies. A buyout is financing to acquire a company, which "may use a significant amount of borrowed capital" and typically buys majority or controlling stakes. Most private equity funds last about 10 to 12 years. Portfolio companies may also pay the private equity firm for managing and monitoring them, Investor.gov notes, among conflicts advisers must disclose.

NVCA's 2022 Yearbook gives example LPs: "public pension funds, corporate pension funds, insurance companies, high net-worth individuals, family offices, endowments, foundations, funds of funds, sovereign wealth funds". Pension funds, managing retirement assets for teachers, firefighters, state employees and corporate workers, are "among the largest allocators", the 2026 edition adds. Savers may hold private equity indirectly "if you participate in a pension plan or own an insurance policy", according to Investor.gov.

Sovereign wealth funds are "owned by the general government" under the Santiago Principles of October 2008, which leave out foreign currency reserve assets held by monetary authorities for the traditional balance of payments or monetary policy purposes, and government-employee pension funds. A fund of funds, says Invest Europe, "primarily takes equity positions in other funds". In 2025, nontraditional investors such as hedge funds, sovereign wealth funds, non-profit endowments and corporate strategic investors participated in roughly 30 percent of US venture deals, and those deals accounted for 83 percent of all investment, NVCA's 2026 Yearbook says.

A hedge fund is "a private, unregistered investment fund" open to accredited investors or qualified purchasers, and hedge funds "are not marketed to retail investors", Investor.gov's guide says. Investors typically pay an asset management fee of 1-2% of net asset value plus a performance fee of 15-20% of profits, subject to measures such as a high-water mark and a hurdle rate. Redemptions are typically limited to "four times a year or fewer", often after a lock-up of a year or more.

A proprietary trading firm trades its own money. EU law calls this dealing on own account, which MiFID II defines as "trading against proprietary capital resulting in the conclusion of transactions in one or more financial instruments". The UK's Financial Conduct Authority says in its guidance that the activity includes "proprietary trading and positions arising from market-making" and is unlikely to be relevant "for most venture capital or private equity activity".

In the EU, buying credit receivables counts as granting credits for the purpose of Article 4(1)(1) of the Capital Requirements Regulation, and a person doing so that also takes deposits or other repayable funds from the public "is a credit institution in accordance with that point, and should hence be required to obtain an authorisation before commencing its activities", according to an answer prepared by the European Commission and published on 3 March 2023 in the European Banking Authority's Q&A tool. Banks earn interest on loans and securities and pay it to depositors and other creditors; the FDIC measures the gap as net interest margin, and its efficiency ratio sets costs against "net interest income plus noninterest income".

Venture debt is "a loan to an early stage company that provides liquidity to a business for the period between equity funding rounds", the European Investment Bank explains. Such loans are typically repaid within 18 months, or sometimes two to three years, and private providers most often expect repayment from the next round. The EIB estimated in May 2022 that venture debt was about 3% of annual venture capital transactions by amount in Europe, against about 15% in the US according to studies it cited. Share and bond sales bring in underwriters: MiFID II lists "underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis" as an investment activity in its own right (Annex I).

Crowdfunding has its own EU ceiling. Regulation (EU) 2020/1503 on crowdfunding, as adopted on 7 October 2020, does not apply to "crowdfunding offers with a consideration of more than EUR 5 000 000, which are to be calculated over a period of 12 months". In a Q&A of 12 February 2025, ESMA said the total includes a project owner's securities offers and loans on crowdfunding platforms plus its other prospectus-exempt "small offers".