An angel investor is a high-net-worth individual who provides early capital to startups — usually at the seed round or pre-seed stage — before institutional venture capital comes in. Angels invest their own money for smaller cheques (₹5 lakh – ₹5 crore typically) and often provide mentorship alongside capital.
Angels in the cap table
Angel rounds create many small holders in the cap table, each with a tiny percentage. These angels are a common source of unlisted shares in the secondary market, because they often sell once the valuation has appreciated significantly.
Why it matters for unlisted shares
Well-known angels (successful founders, domain experts, ex-operators) signal early validation. However, angel-heavy cap tables with many small holders can complicate an IPO — regulators and investment bankers prefer a cleaner table before listing.
Example: A startup's first ₹1 crore came from three angels at a ₹10 crore valuation. By Series C the same stake was worth ₹90 crore, and one angel sold half their holding in the secondary market — making shares available to retail buyers.