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    Categories: Glossary

Angel Investor – Definition

When the term first appeared, angel investors were people who were eager and wealthy enough to invest their money in Broadway plays, at the heart of Manhattan. Who are angel investors today? How do they back entrepreneurial ideas? Find out below!

Angel Investor

Angel investors have been called so since 1978, when William Wessel, a professor at the University of Hampshire, accomplished his study on how entrepreneurs raised the capital in the U.S. and started to use term “angel” to describe investors who backed young entrepreneurs’ ideas.

As such, the term ‘angel investor’ refers to a solid, supportive person who lays capital on startups and – in return – usually gets ownership equity or a convertible debt. Although the notion isn’t widespread yet, the number of angel investors is still increasing. They can invest online via crowdfunding means or, as is more often the case, they can organize themselves into groups and networks of angel investors to provide capital. This can be done once or, then can come back systematically to further support a project, especially during its tough beginnings.

Source Of Funding

Adversely to venture capitalists, who give the money raised in professionally managed funds, Angel Investors provide their own private capital. The idea of angel investing fills the gap between personal backup, provided by friends and family, and more reliable start-up financing in the form of venture capital. There are some available resources, which help to find an angel investor, one of them is Angel.co, where everyone can set up their profile and give an Angel Investor a chance to become more familiar with your project, and another way around, you can find out some information about who are people eager to invest in your brilliant idea.

Being an angel investor is a “risky business” for investors themselves. When financing and providing money to market novices, they require a very high return on their investment, because throwing money down the drain, with the possibility of having no profit at all, may prove a catastrophe for the angel investor.

Who Can Count On Angel Investors Support?

Angel investors are more likely to provide capital for up-and-coming market beginners. Their aim is to help startups and other market newcomers, rather than giving money to those who want to develop their already prospering businesses. Of course, according to the high risk which angel investors take, it is more likely that they will back up projects which are close to coming out, rather than those whose portfolio doesn’t look like a lucrative idea at all.

According to the history of the idea, if the project is a piece of art, it will surely find an angel investor, like those lucky dogs from the Broadway theater!