Angel investor is an individual who backs budding companies or start-ups with seed capital in exchange for ownership in the company. Often, angel investors provide money to help businesses get off the ground. Investments are also made to support businesses through challenging early stages. Angel investors are usually high net worth individuals, retired business executives, or entrepreneurs. They also provide mentorship to entrepreneurs.
The origin of the term comes from Broadway shows which were funded by wealthy individuals. These shows otherwise would have ceded operations due to the unavailability of funds. Therefore, these wealthy individuals were called angels. Professor William Wetzel, in his research, used the term angel to describe the individuals who supported entrepreneurs with seed capital. The motive of angel investors could be beyond just monetary return.
Innovative young companies need a great deal of advice and connections in the industry circles, and angel investors provide advice, connections, and mentorship to the budding entrepreneurs. Innovation and research continue to remain at the heart of the structural changes in the society and economies, and some angle investors find their kick in promoting such ideas, innovation, and businesses.
