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What is an angel investor?

By:  Jennifer Laird | 11th October 2021

If you’re new to start-up funding, chances are you’ve wondered what an angel investor is. So, to help you make sense of angel investment and what’s involved in this type of small business funding, here’s a rundown of how angel investors work. 

What is an angel investor?

An angel investor is an investor who helps to fund start-ups. They’re individuals who look for promising small businesses that need a little financial help to get off the ground. 

What do angel investors get in return? Normally, they want a minority share in the business in exchange for their initial investment. If the small business grows, the shares increase in value, which is how an angel investor makes their money. 

What does an angel investor do?

Angel investors are normally fairly proactive. They’re usually wealthy and successful individuals who want to share their experience and knowledge with new entrepreneurs. The kind of help they might offer you includes:

Every angel investor is a little different, but they all have one thing in common – they want the business to succeed.

What are the pros of angel investment?

Angel investment has some distinct advantages over other types of startup funding – here’s a summary.

Are there any downsides to angel investors?

All that said, there are some drawbacks to choosing angel investment. 

How do I get angel investment?

So, if you think this is the approach for you, how do you go about finding an angel investor? Well, there are a few places you can look:

While you’re looking for an angel, be sure to work on your elevator pitch and business plan. You’ll need these to impress any potential investor.

Is an angel investor right for me?

For a startup, an angel investor can be a lifeline. However, angel investment isn’t right for every business, and depending on your long-term goals, other sources of business funding might be better.

And remember, even if you settle on angel investment, you don’t need to sign up with the first angel you encounter. Always do your research and suss out whether the investor is a good fit for your business before signing a contract. 

Are you looking for a credit card to go along with your new business? Here’s a look at some business credit cards you might want to check out.

Still have questions?

If you didn’t find everything you were looking for on this page, we have other ways to help:

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