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Angel Investor

Definition

An angel investor is an individual who invests their own money in early-stage startups in exchange for equity. Angels typically write $10k-$100k checks and invest before VCs enter.

What is an Angel Investor? How to Find Angels | early.tools

Angels vs. VCs: Angel investors are individuals using personal wealth. VCs manage funds from limited partners (LPs). Angels invest smaller amounts earlier. VCs invest larger amounts later. Angels can move fast (days). VCs need partnership approval (weeks). Why angels matter: They fill the gap between friends-and-family funding and institutional VC. Most startups can't raise a $2M seed round on day one—they need $100k-$500k first to build, launch, and prove traction. Angels provide that. What angels look for: (1) Strong team—can they execute?, (2) Big market—is there room to grow?, (3) Early traction—users, revenue, or rapid growth?, (4) Personal connection—do they understand the problem or industry? Angels invest in people and ideas they believe in, not just spreadsheets. Angel deal terms: Angels typically invest via SAFE (Simple Agreement for Future Equity) or convertible note. They get equity later when you raise a priced round. Typical angel valuation: $2M-$5M cap. Expect to give up 5-15% for your first angel round. Super angels: Angels who invest frequently and write larger checks ($50k-$500k). Examples: Jason Calacanis, Elad Gil, Sahil Lavingia. They often have portfolio companies they actively help with intros, advice, and follow-on funding. Angel syndicates: Groups of angels pooling money to invest together. AngelList Syndicates let one lead angel make the decision, others follow. Startups get $200k-$1M from 20-50 angels in one close instead of pitching each individually. Finding angels: (1) Warm intros from other founders, (2) AngelList, (3) Twitter—angels with 'investor' in bio, (4) Demo days (YC, Techstars), (5) Industry events and accelerators.

Examples

Naval Ravikant (AngelList founder) angel-invested in Uber, Twitter, Postmates. Peter Thiel angel-invested $500k in Facebook for 10.2% (worth billions). Most angels don't hit that—but early bets pay off.

Related Terms

Bootstrapping

Bootstrapping means building your company with personal savings, revenue from customers, or small loans—without taking venture capital. You own 100% and answer to customers, not investors.

Pre-seed

Pre-seed is the earliest funding round before seed, typically $50k-$500k. Founders raise from angels, friends, family, or micro VCs to build an MVP and validate the idea before raising institutional seed.

Seed Stage

The seed stage in bootstrapped startups is the initial phase. Founders use personal resources for activities like market research, product development, and early testing. External funding is not sought at this stage. The goal is to validate the business concept before scaling.

Series A

Series A is typically the first institutional VC round after seed funding. Startups raise $2M-$15M to scale a proven business model. You need strong traction—revenue, users, growth—to raise a Series A.