Outside of the founders, and friends & family, angels are the most typical next step in the private equity continuum as shown below in Illustration 1. Whereas 79% of a first round capital came from the entrepreneur’s personal savings or family and friends, this made up only 11% of the second round, whereas angels provided 34% of the capital in the second round#. Angels provide the critical capital needed by an entrepreneur to grow the business and with venture capital funds to provide the next stage in capital. Angels are individual investors, sometimes organized within informal clubs or formalized angel groups, who invest their personal money into a company. Angels are distinct from venture capital or private equity funds, who have created investment partnerships that manage a pool of capital, typically with a significant portion from larger institutions such as insurance companies, pensions, and endowments.
To read the full, original article click on this link: ANGEL INVESTING 101: An Introduction to Angel and Venture Capital Investing By Michael Gruber – Chapter 4 | Cornerstone Angels
