What is an Angel Investor?
RAA Ventures makes venture capital & provides angel investments to startups in internet marketing, web advertising, social media, mobile gaming and mobile apps. Learn more Here
There are different ways to answer the question, what is an angel investor? An angel investor can be an affluent individual, a group of individuals, an investment fund, or a trust that invests in promising companies that need capital, often startup companies. These types of investment can differ from traditional investments in companies because they may not be solely based on the investment return. The angel investor typically invests in a company either because the company is run by relatives or good friends or because the company represents some sort of ideal with which the angel investor agrees. Often, an angel investment may have fewer strings attached than with other forms of investment, and it may be treated as one-time seed money or as funds to support a startup through a difficult phase. Sometimes angel investors form groups to invest in certain causes or ideals.
What Is an Angel Investor Fund?
Angel investors should not be confused with venture capitalists. While some venture capitalists invest personal funds, they more often pool money from investors into funds which are managed under professional strategies. An angel investor, on the other hand, invests personal money into a company that may be little more than a proposal at the time of the investment. The judgment behind the investment is usually that of the angel investor and may have little to do with any widely accepted investment strategy. For this reason, many businesses are eager to receive the attention of such investors. Sometimes these investments are only a few thousand dollars, but some angel investors have been known to give several million in certain cases. What is an angel investor looking for can differ from individual to individual, and reasons can range from investment returns to simply supporting a product or service.
What Is an Angel Investor Investing in Now?
Recently, there has been a shift in the kinds of companies receiving the assistance of angel investors. Almost 30% of the companies that angel investors invested in during 2010 were based in the health care sector. Software and biotech companies each received more than 15% of the total funds provided by angel investors. Since the economic downturn in 2008, there has been a significant ebb in the number of angel investors who were previously so eager to invest in startup companies. However, 2011 has so far seen a small increase in this sort of activity relative to 2010, both in amount and also number of interested angel investors. What is an angel investor investing in now depends on what sectors of the economy seems to do well or hold the most promise for growth. Some interest has been given to businesses that represent new developments, such as green energy. Such investments play a strong role in spurring business growth in the economy and in creating more jobs. Without the seed money that angel investors provide, many innovative and beneficial technologies may never make it into the hands of consumers. Social media and other software developments are good examples of innovations that may have struggled without the help of angel investors.
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