Angel Investor

Typically, these individuals inject the seed money once or regularly over a set duration until the product or service is brought to market.

An angel investor (or a business angel) is an individual with a vested interest in developing your company by providing seed money in its early stages and receiving company ownership equity in return. 

Angel investors are commonly connections, friends, or family members but may also be other wealthy individuals found in angel investment networks or angel investor sites like Crunchbase who simply like your business idea and expect it to take off based on how viable your business is or can be. 

What are the benefits of angel investors?

Many small businesses or startups tend to prefer angel investors, especially if they decide against bank loans due to their hefty interest rates and high upfront fees.

Having business angels enables more flexibility in terms of investment and, in some cases, deep involvement to help your business go from ideation to launch (though some angels may prefer a hands-off approach for business decisions). 

Difference between business angels and venture capitalists.

It is crucial to differentiate business angels from venture capitalists (VCs). Angel investors usually prefer to invest in small sums but provide more hands-on guidance and mentorship for your business – this is crucial during the early stages of your business development. 

Conversely, venture capitalists tend to invest heavily with hopes of getting higher returns and usually have more experience than angel investors, which makes VCs better suited when you plan to scale your company.