A high net worth (HNW) individual who invests money in start-ups or privately-held companies with feasible business ideas. Entrepreneurs provide angel investors with large equity stakes in compensation for the large risks involved. The entrepreneur, or a management team, assumes the day-to-day operations of the business, while the angel investor exercises slight control over the business, if any.

Angel investing represents the first stage in the age of a firm which is typically followed by three stages: the early stage of venture capital, the later stage of venture capital, and towards maturity, the buyouts stage.