Angel Investors tend to invest in companies in the early stages of the lifecycle of a company when the high risk is offset by the potential high return. They are typically high net worth individuals investing their own money and have often come from a founder/entrepreneur background and use that experience to evaluate the companies that are seeking their support. They tend to have a specific area of focus (industry or type of product) which they are familiar with.

Angel investments in Australia are typically less than $250k and occur at Seed (or sometimes pre-seed) investment rounds. They will expect around 20% to 25% equity in return for their investment (so by a rough definition they invest in companies that are worth around $1m). They are usually passive investors who may keep in touch with the company they have invested in and offer mentorship and guidance to help it succeed, but do not expect to be heavily involved.

Angels will typically invest in good ideas or promising founders, as the company valuations are highly speculative in these early stages so future returns are hard to estimate.

There are over a hundred active Angels across Australia, some syndicates, and a number of Angel ‘groups’. Airtree Ventures (a VC firm) have created a handy list.