BDC Defines 'Angel Investor'

The Business Development Bank of Canada (BDC) has provided a clear definition for the term 'angel investor,' a key concept in early-stage company financing.

An angel investor is defined as a wealthy individual who invests their personal capital into companies during their early growth phase. Because these investors' capital is not guaranteed, they expect to take an equity stake in the companies they support. However, they do not hold rights to the company's assets.

These investments can take the form of shares or convertible debt, and angel investors typically plan for clear exit strategies. Their primary goal is to help companies establish themselves, and they often offer more favorable financing terms than traditional lenders.

BDC notes that angel investors may provide one-time funding or continuous investment into a company's fixed assets or working capital. The bank also directs to further resources in its article "How to Find Angel Investors," which offers guidance on preparing for meetings with angel investors and discusses the pros and cons of working with them.