What is the role of an individual who invests capital in a business but does not participate in its management?

The role of an individual who invests capital in a business but does not participate in its management is known as a silent partner. A silent partner contributes financially to the business and shares in its profits but remains uninvolved in day-to-day operations or decision-making processes. This type of partnership allows individuals who may not have the time or desire to manage a business to still participate in its financial success through their investment.

In contrast, active partners are involved in managing the business, while managing partners take on the responsibility of day-to-day operations. Stakeholders generally refer to anyone with an interest in the business, including employees, customers, and investors, which can encompass a broader group than just investors. Thus, the term silent partner specifically captures the essence of someone who invests but does not engage in management activities.