Start-ups and entrepreneurs seeking capital may find relief with angel investing. The term “angel” originated on Broadway in the early 20th century, when affluent investors offered funding for theater productions. An angel investor is usually independently wealthy and interested in investing in a venture in exchange for a stake in ownership, stock entitlements, or a convertible debt. Angel investors may work alone or together with an angel network or group, in which case they may pool their capital and exchange research on investments and industries. They may provide supplementary financing for companies that already have some capital or those that might be applying for venture capital funding.
Companies that are expected to expand or enter new sectors in the future are more likely to secure angel funding because the expected gains are higher than businesses with restricted earning potential. In the United States, most angel funds are dedicated to Silicon Valley ventures: approximately 39 percent in total.