Which statement about angel investors is commonly true?

Which statement about angel investors is commonly true?

• A. Angels require day-to-day control
• B. They do not participate in profits
• C. They do not expect to be paid until profits are earned
• D. Angel investors typically do not expect to be paid until the business begins making money

Answer: (D)

Angel investors provide early-stage funding in exchange for equity and usually aren’t involved in daily operations. Because their return comes from the company’s future value, they don’t expect regular payments while the business is still growing. They look for a liquidity event (like a sale or IPO) or a point where the company is generating meaningful value, at which time they realize their return. That’s why this statement about not being paid until the business starts making money best fits how angels typically view their investment. The other ideas imply ongoing cash payments or day-to-day control, which isn’t how angel investing is generally structured.

Angel investors provide early-stage funding in exchange for equity and usually aren’t involved in daily operations. Because their return comes from the company’s future value, they don’t expect regular payments while the business is still growing. They look for a liquidity event (like a sale or IPO) or a point where the company is generating meaningful value, at which time they realize their return. That’s why this statement about not being paid until the business starts making money best fits how angels typically view their investment. The other ideas imply ongoing cash payments or day-to-day control, which isn’t how angel investing is generally structured.