A great many new ventures are NOT businesses.
They don’t yet know customers, have a business model, nor see a clear path to making money.
We refer to these as “startups”
Startups are distinct from new businesses (and new businesses are not necessarily startups) in that the business model is NOT known.
This means such ventures are taking great risk. Such ventures are KNOWN to fail at a very high rate. Notably…
90% of all startups fail.
About 54% of all “new business” fail.
And by the way, even with funding, about 70% of all funded startups, still fail.
Frankly, we don’t really have any precise idea of how many businesses fail but these are pretty reasonable approximations drawn from all the studies done blended with some conventional wisdom and commonly cited norms.
Startups are rather like society’s version of R&D (research and development). Companies spend billions of dollars every year to research and try new products and solutions.
Most of those efforts fail.
And I’m sure you’d agree that companies won’t solve every problem… and we certainly can’t look to our governments to be innovative and fuel those risks and efforts… so what does our economy do??
We start startups.
But why “Angel Investors”??? Why does society seek Angel Investors
Angel investors, as the name implies, are nearly philanthropists. They KNOW your industry, they have the wealth, they took the risks, and now they want to pay it forward for something they love.
The name is derived from the same notion of “Angels” being used to refer to patrons of the Arts.
What financial ROI does the person who paid to produce the local off broadway version of Hamilton get? NOT MUCH.
They’re an angel.
The term angel investor was coined in the early 1900s. The term was used to refer to the wealthy patrons of the arts who would provide the necessary financing for putting on Broadway productions in New York City.John Landers; Chron.com
These are NOT business investors. Business Investors expect customers, revenue, and a greater likelihood of success.
You seek out Angels because you’re in the 90% likely to fail. You seek out Angels because you can’t yet make money and don’t know how. Angels are there because they’re angels.
By the way, that most famous of Angel Investors? One of the great patrons of art, Francesco del Giocondo; b. 1465, Florence, Italy; d. 1542.
You might know him better from the familiar face of his wife, an Italian noblewoman, Lisa del Giocondo. Francesco was a patron of Leonardo da Vinci.