What is a Capital Investment Group?

Jim B.

A capital investment group is an investment vehicle that pools resources from multiple investors who share in the profits and losses of various financial opportunities. These groups are usually involved with financing businesses in need of capital to grow and compete on a larger level. The benefit of a capital investment group to an investor is that the funds will be professionally managed to minimize risk. Most of these groups require significant financial commitment from individual investors before they are allowed to join.

Investors may pool their resources to fund the expansion of a factory while limiting individual liability.
Investors may pool their resources to fund the expansion of a factory while limiting individual liability.

For many people who invest their money, it's an individual enterprise that is undertaken without much help or advice. Unfortunately, the complexities of the business world often require more experience and expertise than the average individual investor may have to offer. In addition, some investors may desire the opportunity to invest their funds in privately owned businesses not available on the stock market with the intent of becoming a shareholder of these burgeoning companies. A capital investment group is an opportunity for the average investor with significant capital to make her mark on the business world.

To understand what a capital investment group is, it is first important to understand just what is meant by capital investment. In most cases, capital investment refers to capital that is invested in a company to help it make a significant upgrade to its business. This capital is not intended to help the business in its day-to-day operations. Instead, as examples, it may be used to help a factory purchase a new machine, or it may be used to help fund a marketing campaign intended to increase exposure for a young business.

In return for their investment, those who participate in a capital investment group usually get some equity in the businesses in which they invest. This often comes in the form of shares in the business itself, which can become valuable if the business manages to grow into a major player on the market. Two types of this investment strategy are private equity, in which investors help out a mid-market company that might be looking to make improvements, and venture capital, which usually targets start-up companies.

One of the main benefits of a capital investment group is that the funds within are often professionally managed by experts in the investment field. These managers can target the businesses in need of capital that have the potential to make their investors very wealthy. Such investment usually requires a significant initial amount of money from an individual investor, but capital investment advisors and managers are experts in lessening the risk of the investment by spreading the funds around to a wide variety of destinations.

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