Angel Investor

An angel investor is an individual who provides capital for a business startup, usually in exchange for convertible debt or ownership equity. This type of investor is typically a high net worth individual who has experience in the industry and a desire to help start-up companies succeed.

For example, an angel investor might invest $100,000 in a company in exchange for 10% equity in the business. This type of investment usually comes with a predetermined return on investment (ROI) formula which might look something like this:

ROI = (Investment Gain - Investment Cost) / Investment Cost

In the above example, the angel investor expects to make a return of 10 times the initial investment amount, or $1,000,000. The angel investor will also look for other forms of return, such as an increase in the value of their equity stake.