What's what in finances: Business angel What's what in finances: Business angel

What's what in finances: Business angel

An individual who provides capital for a business start-up in return for a stake in the company.

Business angel is a high net worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. It is known as an angel investor.

They are individuals who seek to invest at the early stages of startups. These types of investments are risky and usually do not represent more than 10% of the angel investor's portfolio.

This private investor not only provides money, but also generally is interested in becoming involved in the project by acting as a guide or mentor.

Business angel provide more favorable terms compared to other lenders, since they usually invest in the entrepreneur starting the business rather than the viability of the business. They are focused on helping startups take their first steps, rather than the possible profit they may get from the business.

Another term related to business angel is net.

See also: Everything you need to know about investments

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