Institutional Investor
Organizations that invest large amounts of money on behalf of others, including pension funds, insurance companies, and endowments.
Definition
Institutional investors are organizations that pool money from many individuals and invest it on their behalf. These include pension funds, insurance companies, mutual funds, hedge funds, endowments, and sovereign wealth funds. They typically have significant capital and sophisticated investment strategies.
Types of Institutional Investors
- • Pension Funds: Retirement savings for employees
- • Insurance Companies: Premium reserves for claims
- • Mutual Funds: Pooled investment vehicles
- • Endowments: University and foundation funds
- • Sovereign Wealth Funds: Government investment funds
Real-World Example
Late-Stage Investment: CalPERS pension fund invests $100M in a Series D round of a unicorn startup
The institutional investor brings credibility, massive capital, and long-term stability to the company.