Business angel or informal investor or an angel investor, is an affluent individual who provides capital for a business start¬up and early stage companies having a high-risk, highreturn matrix usually in exchange for convertible debt or ownership equity. Features of Angel Investors: Providing start-up finance to the needy who want to start a small own business. The main people involved to provide funds are “friends and family”, (it can be seed funding and formal venture capital). But raising of funds cannot be more than a few thousands from friends and family, even the venture capitalist are least interested to make investments.
Thus, angel investments is a common second round of financing for high-growth start-ups or early stage companies.
1. Most angel investors are current or retired executives, business owners or high net worth individuals who have the knowledge, expertise, and funds that help start-ups match up to industry standards.
2. They bear extremely high risk and are usually subject to dilution from future investment rounds.
3. They expect a very high return on investment.
4. Apart from investing funds, most angels provide proactive advice, guidance, industry connections and mentoring start-ups in its early days.
5. Their objective is to create great companies by providing value creation, and simultaneously helping investors realize a high return on investments.
6. They have a sharp inclination to keep abreast of current developments in a particular business arena, mentoring another generation of entrepreneurs by making use of their vast experience.