An Angel Investor is an individual who believes in entrepreneurship, can create value for the economy and has allocated part of his investible surplus for supporting start-ups or investing in a Venture Capital Fund.
Recently, SEBI (Securities and Exchange Board of India) has defined Angel Investor as a person who proposes to invest in an Angel Fund and who has net tangible assets of at least two crore rupees, in individual capacity, excluding value of his principal residence, and who:
- has early stage investment experience, or
- has experience as a serial entrepreneur, or
- is a senior management professional with at least ten years of experience;
Early stage investment experience means prior experience of investing in a start-up or emerging or early-stage ventures. Serial entrepreneur means a person who has promoted or co- promoted more than one start-up venture.
The definition of investors, who can invest in certain types of higher risk investments including seed money, hedge funds, private placements and angel investor networks, is different in each country. The term generally includes wealthy individuals known as accredited investors.
For example in the United States, an individual is considered an accredited investor, if his net worth is at least one million US dollars, not including the value of one’s primary residence or has an income of at least $200,000 a year for the last two years (or $300,000 together with his or her spouse if married) and expects to make the same amount this year.