Business Dictionary
Angel Investor
Definition
An affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.
Deep Dive
An Angel Investor is an affluent individual who provides capital for a business startup, typically in exchange for convertible debt or ownership equity. These investors are often experienced entrepreneurs or executives themselves, bringing not only financial backing but also valuable mentorship, industry connections, and strategic advice to early-stage companies that may not yet qualify for traditional bank loans or larger venture capital funding.
Examples & Use Cases
- 1A retired tech executive investing $100,000 in a promising software startup in exchange for a 7% equity stake.
- 2A doctor providing $50,000 to a medical device company developed by university researchers, offering both capital and access to her professional network.
- 3A successful entrepreneur funding a former employee's new venture with a convertible note, with the option to convert to equity later.
Related Terms
Seed FundingVenture CapitalEquityConvertible Note