Angel investors invest in small startups or entrepreneurs. Often, angel investors are among an entrepreneur's family and friends. Typically, angel investors are focused on helping startups take their first steps, rather than just the possible profit they may get from the business.
Angel investors must meet the Securities Exchange Commission's (SEC) standards for accredited investors. To become an angel investor, one must have a minimum net worth of $1 million and an annual income of $200,000. Angel investors typically use their own money, unlike venture capitalists who take care of pooled money from many other investors and place them in a strategically managed fund.