Definition
Angel Investor
An angel investor is a wealthy individual who invests their own money in very early-stage startups, usually in exchange for equity or convertible securities.
Angels typically come in at the pre-seed or seed stage, writing cheques smaller than a venture fund but larger than friends and family. Besides capital, they often bring mentorship, industry contacts and credibility. In India, many angels invest through registered angel networks or SEBI-regulated angel funds (a category of AIF).
Angel investing is high-risk: most startups fail, and returns come from a few big winners. SEBI's Angel Fund framework and tax provisions (including the now-largely-resolved 'angel tax' debate) shape how angels deploy capital in India.
Related terms
- Seed RoundA seed round is the first significant equity funding a startup raises to build its product, hire a core team and find product-market fit.
- Alternative Investment Fund (AIF)An Alternative Investment Fund is a SEBI-regulated privately pooled vehicle for sophisticated investors, classified into Category I, II and III with high minimum investment thresholds.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.