definition

A business angel, often called an angel investor, is an individual who invests personal funds into early-stage startups, usually in exchange for equity ownership.

Unlike venture capital firms, which manage pooled money from many investors, business angels invest their own capital and often bring mentorship, industry experience, and networks along with their financial backing.

Business angels typically step in at the seed or pre-seed stage, when a company is too risky or unproven for banks or institutional investors. They often bridge the funding gap between friends-and-family money and larger venture capital rounds.

Many startups fail not because their ideas lack merit, but because of high burn rates. If a company spends faster than it earns without a clear path to recurring revenue, it risks running out of cash.

Business angels can extend a startup’s runway by providing early capital, enabling founders to refine their product and find product–market fit before scaling.

A notable example is Jeff Bezos, who became one of Google’s first angel investors in 1998 by investing $250,000. An investment that grew into billions as the company succeeded.

Business angels fuel innovation at its earliest stages and often take risks that institutional investors won’t. For founders, having a business angel can mean more than money. It can mean guidance, credibility, and connections that accelerate growth.