What Are Angel Investors?

This type of investor is typically an entrepreneur who has enough wealth to invest very early in the financing process. Angel investors invest in businesses in which they believe but realize may struggle to find other financing.

An angel investor may buy stock from a company or make a loan. Some serve as mentors and advisors. Some may specialize, such as high-tech angels who prefer helping to bring new technology to the marketplace and may or may not want to actively participate in the company.

Another type is a return on investment angel, who expects to see a financial payback from a high-risk investment. Return on investment angels are more likely to invest when the economy is stable or improving. They may not want to be involved past investing but are often hopeful that they will get a huge payoff if the company goes public or gets purchased by a bigger corporation.