- Angel investors are high-net-worth individuals who provide funding to startups, usually in exchange for shares in the company.
- Unlike venture capitalists, angels use their own money; they also invest in much smaller, younger enterprises
- Startup founders benefit from angels’ expertise as well as money, but they have to surrender some ownership and management control in return.
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New companies need money to get off the ground, of course. But where to find it? Banks tend to shy away from infant enterprises. And despite all the ink spilled about venture capital funding, just .05% of new businesses raise money from VCs, according to Fundable.
That’s where angel investors (angels for short) come in. Typically wealthy individuals with cash to burn, an interest in entrepreneurship, and a healthy appetite for risk, these investors fund over 63,000 startups a year, for a total of more than $23 billion, according to the Center for Venture Research at the University of New Hampshire.
In fact, over the years, as investor interest has grown, angels have become a primary source of funding for many early-stage startups.
What is an angel investor?
Angel investors generally are high-net-worth individuals who provide funding to startups in exchange for convertible debt (bonds) or equity (shares) in the company. The term is actually borrowed from show business: Angels originally was an affectionate nickname for backers of Broadway shows, whose money was manna from