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Angel Investor

An angel investor is an individual who provides capital to startups or early-stage companies, often in exchange for equity ownership or convertible debt. Angel investors typically invest their own money and are often entrepreneurs or successful businesspeople themselves. They are willing to take on high risk in exchange for the potential of high returns if the company succeeds. Angel investors not only provide financial support but may also offer mentorship, guidance, and valuable industry connections to help the business grow.

Example

A tech entrepreneur might act as an angel investor by providing $100,000 in seed funding to a new software startup, in exchange for a 10% equity stake in the company.

Key points

• Individuals who invest in startups or early-stage companies.

• Provide capital in exchange for equity or convertible debt.

• Often offer mentorship and industry connections in addition to financial support.

Quick Answers to Curious Questions

An angel investor is an individual who provides funding to startups or early-stage companies in exchange for equity or convertible debt.

Startups seek angel investors for the capital, mentorship, and industry connections they can provide, especially when other funding sources are unavailable.

The risks include the potential for losing their entire investment if the startup fails, as early-stage companies are often high-risk ventures.