Angel investors are individuals who provide financial support to startups or early-stage companies in exchange for equity or convertible debt. They are often among the first investors in a company and offer capital when it is difficult for the company to obtain financing from banks or venture capitalists.
How they work:
- Investment: Angel investors usually invest their capital in start-ups or small companies with high growth potential.
- Stage of investment: They usually get involved in the early stages of a company, such as the seed or start-up stage, where the risk is higher, but there is also the potential for a high return.
- Amount: The amount invested can vary but is often between a few thousand and a few lakhs.
Role:
- Mentorship and advice: Apart from money, many angel investors offer valuable advice, mentorship, and industry contacts that can help grow the business.
- Risk sharing: They take a higher risk than traditional investors because they know many start-ups fail. However, they hope for a large payout if the company is successful.
Purpose:
- To promote innovation: Angel investors often invest in industries or ideas they are passionate about, helping to encourage innovation and economic growth.
- Financial return: Their goal is to make a return, usually when the company goes public or is sold to a larger company.
