A high-net worth (HNW) individual who contributes capital in the form of debt or equity to a start-up enterprise owned and managed by an independent party (neither a relative nor a friend). The term “angel investor” was originally coined by the financiers of Broadway shows in the beginning of twentieth century. Angel investors were wealthy persons who, as sponsors of arts, contributed capital to help start new theatrical productions. These investors were seen by theater professionals as angels. Essentially, angels are informal investors, though not every informal investor can be considered an angel. Informal investors subdivide into two distinct groups of investors: (1) angels and (2) acquaintances and relatives.
Angel investors invest in enterprises whose capital is at risk (due to the high degree of uncertainty that is associated with the future of the enterprise).
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