What defines an angel investor?

An angel investor is typically characterized as an individual who provides financial backing to early-stage startups or entrepreneurs, often in exchange for convertible debt or ownership equity. The essence of angel investing lies in the fact that these individuals usually invest their personal funds into businesses that they believe have potential for growth and success. They often bring not just capital but also mentorship, guidance, and networking opportunities to the startups they support.

The focus on providing monetary support highlights the role of angel investors in nurturing innovative ideas, especially those that may be too risky for traditional venture capital or banking institutions. Unlike corporate investors, which often require a more formal and structured approach for funding, or government programs that may come with specific regulations or conditions attached to financing, an angel investor typically operates with more flexibility and a personal investment in the success of the startup venture.