‘An affluent individual who provides capital for a business start-up and early stage companies having a high-risk, high-return matrix usually in exchange for convertible debt or ownership equity.’
(i) Identify the source to raise finance available to an entrepreneur discussed in the above lines.
(ii) State any four features of the source of raising finance discussed in (i) above.
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Angel Investors = Wealthy individuals funding start-ups early, usually in return for equity; they often bring both capital and guidance.
(i) Funding Source:
The financing method discussed is an Angel Investor.
(ii) Characteristics of Angel Investors:
Investment Profile:
Angel investors typically finance nascent ventures with substantial growth prospects, accompanied by a considerable risk of failure.
Investment Instruments:
Their investments usually take the form of equity stakes or convertible debt instruments within the enterprise.
Stage of Engagement:
Angel investors generally inject capital during the seed or initial startup phases, a period when conventional financiers might be reluctant to commit funds.
Investor Background:
The majority of angel investors are affluent individuals possessing entrepreneurial or industry-specific expertise, often extending advisory support alongside financial backing.
