First of all, let’s see what a business angel (angel investor) is. This usually is a wealthy person, who is willing to finance a start up, in exchange for a part of the equity of the financed venture, or for convertible debt. It’s not unusual for business angels to be organized in groups, this way they share the risk, combine their experience and know how and can provide much more financing. In many cases angel investors are retired entrepreneurs or executives in big companies. They often participate in the management of the start up and provide not only money, but also know how, business relations and experience. They usually invest their own funds, not like venture capitalists, who invest other people’s money. In 2010, more than 60 000 starting companies received angel financing for more than $20 billion in total. According to these numbers, in the same year the average investment was around $33 000 (which is different from the median value shown below). investing in a starting business is very risky, that’s why business angels require very high rate of return on their investments.
Understanding Angel Investors