What is an Angel Investor?

An angel investor is an individual who puts their own money into a startup at its earliest and least provable stage.

How does an angel investor work?

An angel writes a personal check, often between $10,000 and $250,000, into a SAFE, a convertible note, or a priced round. The capital is theirs, so there are no limited partners to answer to and no fund mandate to satisfy. Most are accredited investors. Many are former founders or operators who buy in on the person as much as the numbers.

Why do angel investors matter?

They fund the stage where nothing works yet. Before there is traction to underwrite, a venture fund model usually says no and an angel judgment can still say yes. Their second contribution is access: introductions, first customers, and enough credibility to turn a cold institutional pitch into a warm one.

Where did angel investors come from?

Broadway called its wealthy backers angels because the show did not open without them. William Wetzel of the University of New Hampshire carried the term into startup finance in the late 1970s while studying how founders actually raised their first money.

How do you work with angels well?

Take money from people whose advice you would want for free. Set expectations early about how involved you want them to be, then send a short, honest update every month whether the news is good or not. Pool the smaller checks into an SPV so the cap table stays clean. And remember this is a person own money, not a fund, so treat a loss as something that touched someone.

Bottom line: An angel bets on you before the evidence exists, which is why the relationship matters more than the terms.

For more startup terminology, visit startupdefinitions.com.