Angel Investing in the Age of AI: Chapter Two — Understanding Angel Investing, The Basics

By the end of this chapter, readers should have a solid understanding of what angel investing is, how it works, and the role it plays in the larger startup ecosystem. They should also be aware of the risks and rewards involved and have an understanding of the legal and regulatory considerations of angel investing.

1. The Origins of Angel Investing

A brief history of angel investing

It’s fascinating to realize that the idea of angel investing has roots as deep and rich as the entrepreneurial spirit itself. The term “angel” originally came from Broadway, where wealthy individuals gave money to propel theatrical productions. These early “angels” were essentially investors, sowing the seeds for what would grow into a flourishing field.

The concept transitioned into the business world in the 20th century, notably in the early days of Silicon Valley where private individuals started funding brilliant minds with groundbreaking ideas, often when traditional funding sources wouldn’t. These individuals, or “angels”, provided much-needed capital to entrepreneurs, thus enabling them to bring their innovative ideas to life.