Funding a startup with your own money and borrowed capital can be an extremely stressful time. Luckily, for some entrepreneurs, there are investors in the market looking to help out and reduce the stress. Angel investors provide a means of funding that is perhaps as stress-free as possible. In simple terms, angel investors invest in the entrepreneurs who are starting a business rather than the viability of the business itself. More focused on helping the business take off rather than the potential profits, angel investors are the opposite of venture capitalists.
An angel investor, as defined by the Securities Exchange Commission (SEC), is an individual who has a minimum net worth of $1 million and an annual income of $200,000. These small business angels use their own money to help startups succeed but stand the risk to lose their entire investment if the business fails. These individuals inject their capital into startups in exchange for ownership equity or convertible debt.