What is an Angel Round?
An Angel Round is a startup’s initial formal fundraising round where capital is raised from angel investors. This round typically precedes venture capital investment and helps fund early product development, market entry, and operational expenses.
How Angel Rounds Work
Startup Valuation: Founders agree on a company valuation to determine equity to be offered.
Investment Terms: Deals can involve direct equity, convertible notes, or SAFE (Simple Agreement for Future Equity) instruments.
Capital Raised: Ranges from $50,000 to $2 million depending on the business and investor network.
Example
A healthtech startup raises $600,000 in an angel round from five investors, exchanging 15% of equity in total.
Benefits
Kickstarts early-stage business growth
Often less formal and founder-friendly than later funding rounds
Enables product validation and initial market traction