I always hear big sites have their own investors... but how does it work?
Imagine you have a great idea for a site (or a site already running) and you want to find an investor to put money into your idea... For example, free sites such as Digg.com and stumbleupon.com both are fueled by big investors... but how does it actually work? I have a few questions (hopefully not too stupid) regarding this....
1) Where to find such investors? Are there actual people looking to invest their money in web projects?
2) What does an investor expect in return? Imagine you have a web project, but you're not on any stock market with your project (or not yet...). What are the advantages for the investor? How does he earn his money back?
3) What exactly does a site do with the money they get from an investor? They spend it on advertising and employees and such?
4) What if the project fails? Is this a risk an investor takes, that he could lose his money?
5) Do you know any other, small and big sites, that are sponsored by an investor?