The definition of the term ‘angel investor’ differs by region, investment quantity and valuation. The narrowest definition of angel investor is an individual who invests in multiple startup companies to fund their early growth, prior to any formal venture capital.

While some angel investors prefer to participate in Series A rounds, early-stage investment is often categorised into what we term Pre-seed and Seed rounds. These rounds are only preceded by the initial, and often informal starting capital sourced by the founders from their immediate circle. This may include friends, family and the founders themselves. Typically at this stage of investment, the company is often pre-revenue and nearly always pre-profit.

There are a number of reasons why investors become interested or active in angel investing. Some have read stories about ‘unicorns’ and want to know how they can find the next one. Others are former founders themselves and are interested in using their commercial skills to help others build their business. Some investors are curious about investing with a higher risk/return profile and others simply want to partner with agile, growth-focused businesses.

The Five Elements of Successful Angel Investment

by Investible

Of course, angel investors want to generate above-average returns on their investments but success can also be defined by your ability to achieve those results while also protecting your downside and effectively managing your time. Read more from Investible's ebook here.