Angel investors and venture capitalists don’t make equity investments in nonprofit good causes. The simple reason is that it’s impossible to make money for investors when the goal of the company is to not make money. Yet as an active angel investor, I still get this question on a regular basis, so I’ll try to outline the considerations in common-sense terms.
A nonprofit organization is generally defined as an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. Examples include charitable organizations, trade unions, and public arts organizations. In the US, a nonprofit is technically any company who qualifies as tax exempt through IRS Section 501(c).
