An angel investor is an affluent individual who provides capital for a business startup, usually in exchange for equity. They fill a gap. Banks often will not lend to unproven companies. Venture capital firms usually wait until a startup has traction. Angels step in early, when the risk is highest.

Angels are often former entrepreneurs themselves. They invest their own money, not a fund's. Beyond cash, they bring advice, introductions, and credibility. A good angel can open doors to customers or follow-on investors. The amounts vary widely, from a few thousand dollars to millions. Some invest alone; others join angel networks or syndicates. The trade-off is ownership. Founders give up a percentage of their company. Angels typically seek returns of ten times their investment or more, knowing most startups fail. The term comes from Broadway, where wealthy patrons funded theatrical productions. The modern version dates to the early 20th century, but it exploded with the tech boom.

What angels offer

• Early-stage capital
• Mentorship and advice
• Industry connections
• Credibility with later investors
• Equity in exchange for funding