Angel investors are also known as seed or private investors; angel investors actively seek out opportunities to provide funding for entrepreneurs or start-up companies. They are often individuals with high net worth seeking new methods of expanding their wealth while simultaneously helping to launch an up-and-coming venture.
By investing, angel investors are not simply loaning funds to a project or company. Instead, they often require some percentage of ownership in the venture based on their initial investment. In some cases, the investment may occur continually as the enterprise develops. But, it may also take place as a one-time contribution that helps the venture get started.
Angel investing tends to be beneficial for both the entrepreneur and the early investor. For example, the investor may find an opportunity to capitalize on earning interest at a rate they will not find in the standard financial market. The entrepreneur is receiving funding at a level they may not otherwise have access to by applying to the typical loan entities, especially as a start-up.
Due to the risks involved, some angel investors also provide mentoring and business advice. This allows them to stimulate the venture’s success, so they are more likely to profit or recover their investment. It may also include help with networking, marketing, and advertising.
Angel investors play a significant role in economic growth. Outside of their potential gains by investing in a start-up, their funding helps launch innovative ventures. These ventures help create jobs and contribute new products and services to the economy.
