Frequently Asked Questions

Who are angel investors and what role do they play in venture capital?

Angel investors are high-net-worth individuals who provide venture capital to up-and-coming and small businesses. They are a diverse group, often comprising entrepreneurs or retired executives who have accumulated wealth from various sources, including their own successful business ventures. Angel investors play a crucial role in the venture capital ecosystem, especially for new businesses that may not have access to other sources of funding such as bank loans, capital markets, or large institutional investors. Venture capital, while a significant source of funding for startups, plays a relatively minor role in funding new businesses overall. Large institutions such as insurance companies, financial firms, pension funds, and university endowments typically allocate only a small portion of their funds to high-risk investments like venture capital. In this context, angel investors fill a critical gap by providing much-needed capital to businesses in their early stages. Angel investors not only provide financial support but also often offer their managerial or technical expertise to the businesses they invest in. This can be invaluable for new businesses that may lack experience or resources in certain areas. In return for their investment, angel investors receive equity in the company, and they may also participate in managing the business.