Angel investors are individuals who provide much needed cash for early stage start-ups. While there are no hard and fast rules, typically angel investors provide substantial capital injections to early funding rounds, after founders have exhausted their own funds. They may also do this via private arrangement prior to formal funding rounds.
In return for providing capital to largely untested (and even unestablished) businesses, angel investors usually gain significant chunks of equity. Founders who are only interested in the funds provided by these individuals are usually missing a trick, because often the greatest benefit an angel investor can provide to a small business is the insight and experience they have gained from their often extensive career.
The name, quite obviously, comes from the idea that these investors are guardian angels selflessly defending the growth and prospects of start-ups against the varied corporate interests which surround them. While not intentional, the name is particularly apt as these people typically have a direct line to the gods of start-ups everywhere, the VC firms and scale enterprises which can make or break you.
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