An angel investor is a high-net-worth individual who provides financial backing for small startups or entrepreneurs. This support is typically in exchange for ownership equity in the company. They are also known as a private investor, seed investor or angel funder. In other words, they provide capital for startups, usually in exchange for convertible debt or ownership equity. In addition, Angels offer mentoring and support. Therefore, businesses that receive investment will generally benefit from the investor’s time, skills, contacts and business knowledge. Angels and entrepreneurs get to spend a lot of time together in order to push the business forward.
Angels can invest alone, but usually they invest together as a syndicate. This way they get to share different opinions and ideas, based on their different backgrounds and experiences. Inside the group there would be a Lead Angel. This person coordinates the investment deal and keeps contact with the business and the owner.
Among the benefits of having an angel investor you might find things like, professional mentoring, the fact that you are still in control because they only get 10-25% of your business, and the credibility and validation it gives to the business. However, having an angel investor doesn’t mean your business is going to grow.
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