The focus of this paper is defining the importance of business angels for financing startup companies. Business angels are informal individual investors who use their business experience and expertise to help startup companies and entrepreneurs in developing their company. They fund high-risk startups that do not qualify for funding from banks or venture capital funds, and in addition to their own capital, they contribute to the development of startup companies with their expertise, skills and business contacts, which contributes to the long-term growth of startup companies. A startup company is a newly founded company that is in the phase of market development and research and has the potential for rapid growth. In most cases they are related to technology projects and software development. This paper defines many formal and informal ways of financing start-ups, from self-financing, through bank financing to informal financing methods. The objectives of this paper are to identify, on the example of the Republic of Croatia and the European Union, the characteristics of business angels, to explain their key strengths and weaknesses, as well as their importance in financing startup companies, and to identify existing business angel networks. The characteristics of business angels in the Republic of Croatia and the European Union and their impact on the development of entrepreneurial culture in the Republic of Croatia and the European Union have been analyzed and it has been concluded that the business angels market in the Republic of Croatia and the European Union has seen significant growth over the last few years, but has not yet reached its full potential and there is room for improvement and even more significant growth and development.