We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Business

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is a Business Angel?

Malcolm Tatum
By
Updated: May 17, 2024
Views: 4,642
Share

Also known as angel investors, business angels are individuals or companies that provide funding and other resources that aid new as well as existing companies in their efforts to reach consumers and capture market share. A business angel is often the source of revenue that can be used to help launch a new business effort, or even help an existing business with a new project. At other times, the angel investment may include the offering of other resources, such as time to help with the business launch or providing the benefit of his or her connections to help the business move toward its goals.

The term itself has to do with the concepts of angels in many cultures as beings who provide comfort, counsel, and aid to humans at crucial points in their lives. A business angel normally encounters an entrepreneur at a time when there is a significant need for assistance, often financial but sometimes in terms of other resources. Thanks to the willingness to make some sort of angel investment, the entrepreneur can pursue his or her goal of establishing and growing a business and have a much better chance of succeeding.

Many think of the business angel or angel investor as contributing only financial resources to a business. While this is certainly the case in many instances, the contributions of the angel investor do not have to end there. Depending on the level of rapport that is established between the business owner and the investor, there are also other ways to support the organization and increase the chances of turning a profit on that investment. A business angel with considerable experience in managing a company or acting as a financial officer, or even an investor with practical experience in organizing and managing a production floor may also choose to invest time in the new business venture.

At the same time, the business angel may also use his or her business and social contacts to help the new business effort grow. Those contacts may include vendor partners who extend discounts for goods and services to the new venture, based on their pre-existing relationships with the angel investor. The contacts may also provide the means of allowing the new business to get their products in front of potential clients who otherwise would not be interested in talking with an as-yet unproven company.

A business angel is often compensated in terms of interest paid on funds loaned to the receiving company. At other times, additional benefits such as shares of stock or other compensations for support rendered may also be included in those returns. As with any type of investment opportunity, the business angel will asses the potential of the effort, including the level of risk involved, and make a decision on what type and how much of the available resources will in fact be diverted to the opportunity.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.

Editors' Picks

Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
Share
https://www.wisegeek.net/what-is-a-business-angel.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.