Private Investor
Private Investors are sometimes called Angel Investors. Angels are usually affluent individuals who have successful in business and now manage the money they made by investing in startup businesses It may also be a group of people that have pooled their money and are investing it. There are also networks of angels who pool their money and research.
Since venture capital firms have migrated to larger transaction sizes and typically will not participate in the first round of financing, angel investors have become an important source of funding for startups that bridge the gap between what they are able to raise personally through friends and family and the level at which they can attract venture capital or qualify for bank funding.
Angels, like venture capital funds, buy an equity position in the company. They also expect extremely high returns (such 10x their investment in 5 years) because they are taking alot of risk. Like venture capital funds, they may have certain performance measures built into their agreement and the right to replace the management team if those measures aren't met. It is a costly form of funding but may be the only source of funding for a startup.
there are also angels that have built significant wealth in a particular industry, such as restaurants, that now invest their money with others starting in the same industry. Typically, however, this is with people they know and trust, but it's possible to attract this type of investor who can also act as a mentor as well. This is not common and not easy to arrange.