An angel investor is a type of early investor that provides money to a startup in addition to helping it get off the ground. In return for their investment, angel investors typically obtain an equity stake or convertible debt in the company. Occasionally, angel investors are always the first to invest in a novel concept. Angel investments are typically made on more advantageous terms for the business than subsequent investment rounds.
Angel investors, unlike venture capitalists, are more interested in the founders’ dedication and enthusiasm, as well as the broader market opportunity they have recognized. While angel investors do not want to lose money, they are not as concerned with making money quickly as venture capitalists.
While angel investors can make or break a startup’s success, they are primarily investors. They don’t want to give their money away; instead, they want to have it back at some time. Angel investors frequently assess the feasibility of the founders’ business plan, track records, existing revenue, and exit strategy to improve their chances of receiving their investment back with appreciation.
Angel investors might work alone or in a group. Angel groups are groups of people who pool their money and pick which firms will receive funding as a group. It is advantageous since the angels may discuss ideas with one another and gain multiple viewpoints on future investment prospects during the evaluation process.