The Development Of Angel Investment

Angel Investment which was originated in 1900's Broadway is developing rapidly in Occident and emerging Asian countries nowdays. As an investment of private equity, angel investment capital is invested before the venture capital, hence it is important to start-ups.The paper deeply analyses the status both of our country's informal sources of capital and SMEs. There is huge informal sources of capital in our country and the holders have desirability to make it incremental, however, the investing channel is limited. Meanwhile, the SMEs face the financing problem since it is difficult for them to get loan from banks. Herein, Angel Investment, the equity investment mode, which is brand new in China is introduced in the paper. Moreover, the development and the effect of such an investment mode is analysed. The author consider angel investment can effectively alleviate the conflict of capital supply and demand between informal sources of capital and SMEs. Therefore there is need to spread such an investment mode in our country.The empirical study analyses the status of informal sources of capital and the market behavior characteristics of angel investors in Cixi, Zhejiang Province. It concludes that the angel investment has developed in certain degree, however, it still lags the advanced markets. It is caused both by subjective and objective factors. In order to improve angel investment in China, some advice is made at the last of the paper.