What type of investor is an angel investor?

An angel investor is primarily characterized as an individual who invests their personal money into startups or early-stage companies, typically in exchange for equity ownership or convertible debt. This type of investor is often motivated by a desire to support new ideas or entrepreneurs, and they may also provide mentorship and valuable industry connections, in addition to financial backing.

The personal nature of their investment distinguishes angel investors from institutional investors, who manage pooled funds for organizations such as pension funds or insurance companies. Unlike government funding entities, which typically provide grants or loans with specific requirements tied to public policy aims, angel investors are motivated by personal interests and have greater flexibility in their investment decisions. Additionally, while crowdfunding participants contribute small amounts of money from a larger pool of investors, angel investors typically make larger individual investments.