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Angel Investor

Definition

A high-net-worth individual who provides financial backing for small startups or entrepreneurs.

Deep Dive

An Angel Investor is a high-net-worth individual who provides financial capital to small startups or entrepreneurs, typically in exchange for ownership equity or convertible debt. Unlike venture capitalists, who manage institutional funds, angel investors usually use their own personal funds. They often invest in the earliest stages of a company's lifecycle, known as seed funding rounds, filling a critical gap when traditional financing options like bank loans may not yet be available due to the high-risk nature of nascent businesses.

Examples & Use Cases

  • 1A retired tech executive investing $75,000 into a promising new SaaS startup founded by former employees
  • 2An experienced entrepreneur providing seed funding and mentorship to multiple early-stage health-tech ventures
  • 3A doctor investing personal savings into a medical device startup with a vision to revolutionize patient care

Related Terms

Venture Capital (VC)Seed FundingStartup FundingEquity Investor

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