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Definition: an Angel Investor is an affluent individual who invests a relatively small amount of his own capital in a startup company, typically in an early stage, following initial seed funding by family and friends of the entrepreneur and before venture capitalists are considered.
In return the AI usually receives convertible debt or ownership equity. Angel investments bear very high risk and are usually subject to dilution from future investment rounds. That's why AIs usually expect a potential return of at least 10 times their original investment by means of an exit strategy or initial public offering.
AI is a form of private equity, like venture capital and crowdfunding.
Also called a business angel.