Angel Investors

An angel investor is usually an affluent individual who provides capital for a business start-up. The angel investor usually invests in exchange for convertible debt or ownership equity. Increasingly, angel investors are organizing themselves into angel networks or angel groups to share research and pool their investment capital. Angel investors normally invest their own funds. Angel investors are not like venture capitalists, who manage the pooled money of others in a professionally-managed fund.

Angel investors are typically regarded as individuals, but the actual entity that provides the funding may be a trust, business, investment fund, etc. Capital provided by angel investors fills the need for start-up financing that friends and family frequently provide as seed funding or venture capital. Angel investors can supply funding where venture capitalists cannot, since most traditional venture capital funds are usually not able to consider investments under US$1–2 million. Angel investors are commonly used as the second round of financing for high-growth start-ups. Angel investors are responsible for investing as much or more anually as venture capitalists. Angel investors typically provide a high percentage offunding for healthcare services and medical devices.

Angel investors are required to bear extremely high risk. Therefore, angel investors require a very high return on investment. Professional angel investors seek investments that have the potential to return at least 10 or more times their original investment within 5 years since a large percentage of angel investments are lost completely when early stage companies fail. Angel investors are relieved of the contract through a defined exit strategy, such as plans for an initial public offering or an acquisition. Contact Strong Business Credit for more information about getting funding through angel investors.