What is an angel investor?

An angel investor is an individual who provides financial support to startups, typically in the early stages of development. This funding is often offered in exchange for equity, which means the investor will receive a share of ownership in the company, or convertible debt, which can be converted into equity at a later date. Angel investors are usually affluent individuals who use their personal funds to help entrepreneurs bring their ideas to life. They play a crucial role in the startup ecosystem by providing not just financial resources, but also mentorship and industry connections.

In contrast, the first choice refers to organizations that may invest in larger corporations, but they do not typically focus on startups. The third choice describes government agencies that provide grants, which is a different form of financial support that does not involve a return on investment. The fourth option relates to loan officers, who work with banks to facilitate loans for small businesses, typically requiring repayment rather than offering investment in exchange for equity. Thus, the distinction of an angel investor lies in their individual approach to supporting startups directly.