What is angel investing?

Angel investing refers to the practice where affluent individuals, often referred to as "angel investors," provide financial support to startups and early-stage companies. These investors typically utilize their personal funds to invest in businesses that they believe have high growth potential. They not only offer capital, but they often provide invaluable mentorship and connections that can help a new business thrive.

Angel investors are usually motivated by a desire to support innovation, earn a return on their investment, and sometimes to maintain involvement in the startup ecosystem. They play a critical role in the funding landscape, especially for entrepreneurs who may not yet qualify for traditional financing methods.

The other options present different forms of investment or funding sources that do not align with the specific characteristics of angel investing. For instance, venture capital firms usually invest larger sums in exchange for a more substantial equity stake and operate with different structures compared to individual angel investors. Government funding typically comes with conditions or specific requirements that differ from individual investment methods. Finally, bank loans for small businesses involve structured repayment and interest terms, which contrasts with the more flexible nature of angel investment.