investment
An angel investor is an individual (or a small syndicate of individuals) who writes an early cheque, usually before institutional venture funds lead. Angels invest their own capital and often their time; they are not a fund with an LP mandate.
Angels are individuals taking equity financing or convertible note risk with personal money. In the U.S., many invest under SEC accredited-investor and exempt-offering rules; other countries have their own private-placement regimes. The economic instrument often looks like venture. The governance does not: there is no IC memo, no ILPA reporting, and often no follow-on reserve.
Family office capital can look similar at small cheque sizes; it is a different legal and professional setup and is covered there.
A lead angel sets terms; a syndicate fills. Convertible instruments are common because priced rounds are expensive to document. Angels may take a board observer seat or none. Their value, when real, is customers and hiring, not a 40-page SPA.
Six angels put €50k–€150k each into a €600k note with a €6m cap and 20% discount. Eighteen months later a VC prices a round at €10m pre-money. The cap, not the discount, drives conversion. Founders who did not model the cap table discover the seed is 15% fully diluted, not “about 10%.”
Founders like angels for speed. Later venture capital funds dislike messy angel stacks, side letters, and missing consents. Cleaning that stack is a closing condition more often than founders expect.
Twenty angels with twenty slightly different notes. Promising a board seat to every cheque. Using angels as a substitute for customers.
Angel capital rarely fills a Series B. It also rarely brings institutional process discipline — which is a feature until you need a data room that will survive PE.
If angels are on the cap table, treat them as a structure to maintain: one instrument, one information pack, clean consents. That is cheaper than reconstructing history at the first institutional round.