What is an angel investor?

An angel investor is an individual who provides capital to startups, typically in exchange for ownership equity or convertible debt. This form of investment is crucial for entrepreneurs seeking initial funding to develop their business ideas, as it often comes at a stage when traditional financing options, like bank loans or venture capital, may not be available. Angel investors not only contribute financially but often also bring valuable mentorship and advice to the entrepreneurs they invest in, leveraging their own experiences in business to help the startups succeed.

The distinction of an angel investor lies in their willingness to take on higher risks by investing in early-stage companies, which aligns with the nature of their support for innovation and entrepreneurship. This makes them different from other entities, such as corporations that primarily fund established businesses, government organizations that provide grants, or banks that typically focus on lending to businesses with a proven track record.