Angel Investment

Angel investment is a form of equity financing in which an individual investor, known as an angel investor, provides capital to startups or early-stage businesses. These investors often use their own funds to support the growth of young companies in exchange for ownership equity or convertible debt. Angel investors typically step in when the startup is in its earliest stages and has not yet secured funding from venture capital firms. Angel investments are characterized by a high level of risk, as these companies often have little to no revenue and are still developing their product or market fit. Angel investors often bring mentorship, industry connections, and business advice, which can be critical for the success of startups.

An example is the early funding of InMobi by Naveen Tewari’s professors and friends from IIT and Harvard. InMobi, now a global mobile advertising technology company, started as an SMS-based search platform called mKhoj in 2007. These early funds were crucial for product development, initial team building, and pivoting the business model to mobile advertising.

Many of Silicon Valley’s early success stories were supported by angel investors who were themselves former entrepreneurs. For instance, successful founders like Mike Markkula provided early-stage funding to companies such as Apple. In 1977, Mike Markkula became an angel investor for Apple. He invested $250,000 and also provided business expertise that helped the young company grow.