angel investor

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Angel Investor

A high net worth individual who provides financing to a start-up, either in exchange for convertible debt or equity. Among start-ups, they are thought of as a bridge between loans from family and friends and venture capital, though angel investors are themselves often personally connected to the business. Angel investors take on a great deal of risk when they invest in these start-ups; they are also subject to dilution at the start-up's IPO. Therefore, they usually require a high rate of return in exchange for their financing. They are informally known as angels or informal investors.

angel investor

A wealthy investor who provides capital for new business ventures.
References in periodicals archive ?
Mason, 1992, "The Roles of Investors in Entrepreneurial Companies: A Comparison of Informal Investors and Venture Capitalists", in: Churchill, N.
As might be expected, most countries with high rates of entrepreneurial activity (TEA) also have high informal investor prevalence rates (for example India, Bolivia, and Peru) and vice versa (for example Hungry, Russia, and Japan).
The research also showed that the average amount of cash required by a new business was around pounds 28, 550, with the entrepreneur providing around pounds 18, 000 of that and informal investors providing the difference.
The research also showed that the average amount of funds required by a new business was around pounds 28,550, with the entrepreneur providing around pounds 18,000 of that and informal investors providing the difference.
Commenting on the latest findings of small business financing from the 2003 Global Entrepreneurship Monitor (GEM), Marianne Hudson, executive director of the Angel Capital Association (ACA), a program of the Ewing Marion Kauffman Foundation of Kansas City, said, "Angel investor groups are filling an important funding niche between informal investors of family and friends and formal venture capital.
He warns that "it may be counterproductive to the economy to encourage amateur informal investors, but that business angels are not amateurs".
However, recent research from the universities of Glasgow and Edinburgh has suggested that this model needs to change further if the full impact of informal investors is to be capitalised upon.
FOR many small growing firms, individual informal investors play a vital role in supporting their development.
The company was initially funded by a group of informal investors and also received a loan from the Agentschap NL.
Blacks gauge their initial capital needs lower than do other ethnic groups and amass smaller amounts of startup capital, from both formal and informal investors, according to the study.
The professor is right when he says informal investors lack a strong voice in Washington.

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