Angel Investor
An angel investor is an individual who invests personal capital into early-stage startups, typically at pre-seed or seed.
Allocator relevance: Angels shape early ownership, signaling, and sometimes governance dynamics that carry into institutional rounds.
Expanded Definition
Angels often invest before institutional managers, providing initial capital and sometimes operational support, networks, or credibility. Angel involvement ranges from passive participation to high-engagement advising. The economic and governance impact depends heavily on instrument choice (SAFE vs priced round) and negotiated rights.
From an allocator lens (especially for venture exposure), angels are relevant because they affect cap table cleanliness, follow-on coordination, and early round signaling.
How It Works in Practice
Angels invest through SAFEs, convertible structures, priced rounds, or SPVs. Syndicates may pool angels under a lead to streamline negotiation and allocation.
Decision Authority and Governance
Angels typically hold limited formal control unless they secure board seats or protective provisions. Governance influence is often informal and can be positive or disruptive depending on coordination and incentives.
Common Misconceptions
- Angels always add strategic value.
- Angel checks always come with pro-rata rights.
- Angel-heavy cap tables are automatically negative.
Key Takeaways
- Terms and coordination matter more than the label “angel.”
- Early ownership and instrument choice shape later dilution and control.
- Syndicate structures can reduce or increase cap table complexity.