ANGEL INVESTORS
An angel investor is an individual who provides capital to startups and small businesses in exchange for ownership equity or convertible debt. Angel investors often use their personal wealth to fund these ventures and are typically experienced entrepreneurs or executives themselves. Here are some key characteristics of angel investors:
High Net Worth: Angel investors are usually high-net-worth individuals who can afford to take risks with their investments.
Early-Stage Investment: They often invest in early-stage companies, which might be too risky for traditional venture capitalists or banks.
Equity Stake In exchange for their investment, angel investors usually receive an ownership equity stake in the company, although some may opt for convertible debt, which can later be converted into equity.
Mentorship and Guidance Beyond just providing capital, many angel investors also offer their expertise, mentorship, and industry connections to help the business grow and succeed.
Higher Risk, Higher Reward: Due to the nature of investing in startups, angel investors take on higher risk but also have the potential for significant rewards if the business succeeds.
Less Formal Structure: Compared to venture capital firms, the investment process with angel investors tends to be less formal and more flexible.
Investment Size The amount of capital invested by angel investors can vary widely but typically ranges from a few thousand to several hundred thousand dollars.
Angel investors play a crucial role in the entrepreneurial ecosystem by providing the necessary funding and support to innovative startups that might not have access to traditional financing sources.