A private investor is someone who invests their own money in companies and financial products. An investment in your business from a private investor can be the key to your success. The number one reasons companies fail is due to lack of adequate capital. A private investor can bring loads of experience and connections to the table, to help your business; in additional to the capital they can provide.
Sometimes a private investor will invest in a new company simply to form a bond with an entrepreneur and to do something to keep them busy. Nurturing and watching a startup business grow can be a rewards experience for the private investor, especially if the business takes off and revenues become significant!
A private investor is different from a venture capitalist in that their requirements to invest are often much lower. In addition, they have been called much "nicer". Venture capitalists often invest the money of other people, and the same goes for investment bankers. However, since the private investor is putting their own personal funds at stake, they often have a greater desire to see a business succeed, and this commitment can really help a business grow.