ANGEL INVESTOR Meaning and
Definition
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An angel investor is an individual or sometimes a group of affluent individuals who provide financial support and investment capital to early-stage or start-up companies in exchange for equity or ownership in the company. They typically invest their own personal funds, as opposed to institutional investors who invest on behalf of an organization or fund.
Angel investors play a critical role in the entrepreneurial ecosystem by providing the much-needed capital and support to new and innovative businesses that may have limited access to traditional funding sources. They often contribute not only financially but also offer their industry expertise, experience, and network contacts to help the start-up grow and succeed.
These investors are generally looking for high-potential, high-growth companies that exhibit strong prospects for long-term profitability and expansion. Angel investors can be found across various industries, including technology, healthcare, finance, and consumer goods.
Angel investments typically occur during the early stages of a company's development, commonly referred to as the seed or startup stage. They may invest at different stages of a company's growth, from concept development to initial product launch or market expansion.
Angel investors differ from venture capitalists in terms of the scale and nature of their investments. While venture capitalists typically invest larger sums of money and focus on later-stage companies, angel investors are often willing to take on higher risks and invest in companies at the early stages of their development.
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Etymology of ANGEL INVESTOR
The term "angel investor" is derived from the concept of an angel or guardian angel, which is a spiritual being often depicted as benevolent and protective. The etymology of the word "angel" can be traced back to the Old English word "engel" and the Latin word "angelus", both of which were borrowed from Greek "angelos", meaning "messenger" or "messenger of God". In the context of investing, an angel investor is seen as someone who provides financial support, mentorship, and guidance to entrepreneurs or individuals starting up a business, assuming a nurturing and protective role similar to that of a guardian angel. The term became popular in the early 20th century to describe individuals who provided capital to early-stage ventures.
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