Series A and Angel Investments

When a company embarks on its first significant round of venture capital financing, it is usually called “Series A” and the investors from that become the Series A Investors.  This first series of stock after the common stock and common stock options issued to company founders, employees, friends and family may also include an Angel Investor. 

An Angel Investor is an individual, often successful in business, who wants to invest their own personal funds into a potentially rewarding business opportunity.  They may even work with others to provide the seed funding needed and could go as high as $1 million as an investment.  These individuals often have experience and contacts that can be critical to the success of the business and whether they want to function in a “hands on” or “hands off” position, you will want to know that going in.  They usually take between 20 and 50 percent stake in the company they want to help.  Often, they will use the company’s valuation as a measure for how much ownership they should take so that valuation should be carefully prepared by a professional and then discussed with an attorney to help you make financial decisions that will have long term effects.