Angel investors are people or organizations who make investments in startups or early-stage businesses in exchange for an equity ownership interest. In exchange for a stake in the company, they provide cash to promising startup enterprises. It indicates that they offer financial support to small businesses or entrepreneurs, generally in exchange for stock ownership. Wealthy people who engage in company endeavors and offer money for businesses that need rapid funding are known as angel investors.
Unlike venture capitalists, angel investors typically do not want a large amount of control in the companies they invest in. Angel investors are willing to wait longer for a return on their investments than a venture capitalist would and they also are willing to fund investments well under 500,000 which is the minimum amount of funding that venture capitalists provide. Angel investors are a smart option to consider for a small to medium-size business in need of funding without giving up too much stake in the company.
Profile of an Angel Investor
- Prefers to invest within one day of travel
- Typically well educated
- Tends to invest in a group
- Range of investment: $10,000 – $1,000,000
- Average investment – $10,000 – $250,000
- Makes one investment every two years