Angel investor

An individual who invests their own money directly into early-stage private companies, usually in exchange for equity or a convertible instrument.

Example

A former software founder putting 25,000 into a friend-of-a-friend's pre-seed round.

Important

Angels answer to nobody but themselves, so any discipline in their process is self-imposed.

Related terms

• Syndicate — A group of investors pooling money to invest in a single company alongside a lead investor, typically through a special purpose vehicle.
• Investor — Someone who buys an asset expecting to hold it long enough for the underlying business or asset to create value.

Lessons that explain it

• An angel invests their own money, and that changes everything about how they decide — Individual and angel investors put personal capital into companies. They move fast, write smaller cheques and answer to nobody - which is both their advantage and their risk. (9 min)
• Knowing what each investor needs back tells you how they will behave — Every investor type has a different definition of a good outcome. Mapping those needs explains most disagreements on a cap table before they happen. (10 min)

All 578 terms in the Investing glossary