Angel

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Angel

An investment-grade bond. Antithesis to fallen angel. In the context of venture capital, the first investor.

Angel

1. Informal for angel investor, which is 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 angels are themselves often personally connected to the business. Angels 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.

2. Informal for investment-grade, which describes a bond with a medium or high rating. Angel bonds are rated Baa3 by Moody's or BBB- by S&P or Fitch. Angel bonds are considered sufficiently low-risk that the law allows banks to invest in them. In addition to being low-risk, they provide a low return, greatly reducing the cost on the issuer. All Treasury and most municipal bonds are angel bonds.