what is angel investment ?

Angel investment can be a crucial source of funding for startups, especially when they are too early-stage to attract venture capital. It helps these companies move from the concept or prototype stage to a more mature and sustainable business. However, startups and angel investors need to carefully negotiate the terms of the investment and have a clear understanding of their roles and expectations to ensure a successful partnership.

Here are some key characteristics of angel investments in startups:

1. Early-Stage Funding: Angel investors typically get involved in a startup during its early stages, often when the company is just getting off the ground and needs capital to develop its products, scale operations, or achieve other milestones.

2. Equity Ownership: In exchange for their investment, angel investors receive equity or ownership stakes in the startup. This means they become shareholders and have a vested interest in the company's success.

3. Mentorship and Guidance: Many angel investors offer more than just money; they often provide valuable guidance, industry knowledge, and mentorship to the entrepreneurs they invest in. This can be as important as the financial support.

4. Risk Tolerance: Angel investors understand that investing in startups carries a high level of risk. Many startups fail, and angel investors are aware that they may not see a return on their investment or may have to wait several years before realizing any gains.

5. Diverse Investment Portfolios: Angel investors typically diversify their investments across multiple startups to spread risk. They may invest in various industries and companies with different growth potentials.

6. Exit Strategy: Angel investors usually expect a return on their investment through an exit strategy, such as a sale of the company, an initial public offering (IPO), or acquisition by a larger company. This is when they can cash out their equity for a profit.

7. Network and Connections: Angel investors often have extensive networks and connections in the business world, which can benefit the startups they invest in by facilitating introductions to potential customers, partners, and other investors.