What Is an Angel Investor?

Most angel investors are successful business leaders or professionals who make significant investments in other companies, usually early-stage startups. They typically invest in businesses within their particular area of experience and expertise.

The most important role of an angel investor is to infuse your startup with cash. But unlike other types of financing — such as bank loans — angel investors can do more than keep your company´s coffers full. Angels often take a hands-on advisory or consulting role in the company, especially when it's just starting out.

Angels can be invaluable resources who help you to connect with future rounds of financing, to build your executive team, to choose advisory board members, and to meet potential business partners.

Keep in mind, however, that an angel investor is just that — an investor. They expect to turn a profit by owning a part of your company. Therefore, not only should you have a plan for providing them with a reasonable return on their money, but you also need to agree on the details of the plan. Typically, a cash return within five to seven years is considered reasonable and is often achieved by selling the company or taking it public.