Business Development Bank of Canada Defines 'Angel Investor'

The Business Development Bank of Canada (BDC) has clarified the definition of an angel investor. According to BDC, an angel investor is a wealthy individual who invests their personal money in early-stage companies.

BDC explains that angel investors expect to take ownership positions in the companies they support because their capital is unsecured, meaning they have no claim on the company's assets. Their ownership may take the form of equity or convertible debt. They also tend to have clear exit strategies for ending their involvement with the business.

The goal of an angel investor is to help businesses get established. Their funding terms are often more favorable than those offered by other lenders. Many invest to support the entrepreneur behind the business, rather than solely the business itself. Angel investors may provide a one-time injection of capital or invest on an ongoing basis in a company's fixed assets or working capital.

BDC also offers a more comprehensive article on the subject, titled "How to find angel investors," which includes advice on preparing for meetings and the advantages and disadvantages of working with them.