Define Angel Investors

Define Angel Investors - Individuals or groups who invest in businesses looking for a higher return than they would see from more traditional investments. In return for their investment they often are highly involved in the business. Usually they are the bridge from the self funded stage of the business to the point that the business needs the level of funding that a venture capitalist would offer. Funding estimates vary.

These Investors typically offer expertise, experience and contacts in addition to money. Less is known about angel investing than venture capital because of the privacy of the investments, but the SBA estimates that there are at least 250,000 Angel Investors active in the country, funding about 30,000 small businesses a year.

Some Investors ask for the right of first refusal to participate in the next round of financing. While this sounds eminently reasonable, some venture capitalists will want their own players only or certain investment minimums so this strategy may limit who future participants might be.