An Angel investor is someone in position with a soaring net worth as an individual who offers financial support for the small entrepreneur investors, small startups or even small scale ventures. The Angel Investors are someone that could be found in and around an entrepreneur’s family and friends.
The help provided by the Angel Investors as small funds is a one-time investing in order to help the business to get off the starting point or a thrust what is needed to get through the starting point.
Angel Investors: A simple concept
The angel investment definition is as mentioned above Angel Investors are the ones who help the people who are in need of some financial help in the beginning stage of the business. Such type of huge investments are highly risk potent and do not show more than just a peek of investors portfolio. One can say just a 10 percent of investor’s portfolio.
In contrast to any of the investors out there, Angel investors are the ones who provide more comfortable terms and conditions. As they are the ones majorly investing in new or small startups rather than focusing on the business viability.
Rather the Angel investors prefer focusing on providing a helping hand to the new companies in their initial steps, instead than the probable profits which could be extracted from a business. Nevertheless, the angel investors are complete reverse of entrepreneur’s investors.
Angel investors are better known as informal investors, private investors, angel funders, angel financers or even business angels. These are the people, who are usually efficient to inject the funds for the new startups in turn for the convertible debt or ownership equity.
A few of the angel investors make sure they are investing through the known crowd funding operations or create a network for angel investors in order to share the funding and the term used for it is pooling for investment.
1. Any Angel investor is an individual who normally having a huge net worth who invests in new startups majorly the smaller ones. Mainly a great potential idea for the new business ideas at the beginning stages, frequently with the money they own.
2. Most of the times Angel investing is the first source of raising funds for a majority of startups and small ventures who come across the fact that it is far more tempting than all the others. Which means, predatory means various forms of funding?
3. The firm support that the angel investors offer to foster and support the startups and small venture owners innovate meaning more and more of growth in economy.
4. This comes down to the conclusion that such type of investments are far more risky and majorly does not withhold more information of an investor. Just a 10% of the investor information it can host to help others.
Angel Investors: Their Origin
The concept or one says it as “Angel” is derived of the theatre based on a Broadway, wherein rich or one can say ultra-rich used to inject the theatrical productions in a smooth and affluent manner. Also on the other hand “angel investor” was initially put to use by an individual named William Wetzel who belonged from the New Hampshire’s, the one who laid the foundation of center for venture research & development. Wetzel is an individual who accomplished his study on the manners or techniques on how entrepreneurs or ventures raised funds.
Who do qualify for being an Angel Investor?
The Angel investors are the frequent people who have bagged the entitlement for being an “accredited investor” or a status of becoming a trusted investor which is not relevant. The SEC (Securities and Exchange Commission) explains the term “accredited investor” as an individual of withholding a total worth of $1 million in total value of assets which will be excluding the personal residences, or any person who has earned or made a fortune income of $200 thousand in the last 2 years.
Also the ones who have a compiled income of over and above $300 thousand for the ones who have married or seen as been married. Adversely in the end, being an investor of an accredited entitlement is not at all similar to being or becoming an angel investor.
Initially these people or individuals have the finances of both along with the wish to offer funding for the new ventures. This is greeted by the in need of cash ventures who see the angel investors much more preferable or tempting over all the alternatives of raising funds for the startup.
The Funding Sources
The Angel Investors are frequently the ones who are keen to use their own hard earned money, dissimilar to the new startup capitalists who are the ones who nurture, foster and take care of collected money from different sources and put them in a manner which may appear like it’s a whole and soul managed capital.
Despite the fact that the Angel Investors normally demonstrate individuals, the entity which usually offers the funds may be prone to turn out like a LLC (Limited Liability Company), an investment fund, a business, a trust among which majority of other types of vehicle. This gives a better understanding of angel investor definition.
The Investment Profile
The Angel Investors are the ones who fuel startups, ventures which see a downfall at the beginning stages misplace the investment trust radically. That is the main reason for the angel investors who are professional in a manner of speaking have managed to come across a predetermined strategy for exit.
As it is a known fact that the Angel Investing has seen a tremendous growth in over a few decades. As the motive of high margin profitability has authorized it to see it as a chief source of capital pooling for majority of the startups or newest ventures. This, however in return has allowed the care and motivation of innovation which actually means there will be an economic growth. A wide scope for the economic growth equally. This in the end helps with the question what is an angel investor?