An angel investor is an individual who makes direct investments of personal funds into a business, usually in the early-stage of the business. Most angel investors are high net-worth individuals since they must be able to absorb a loss if the business fails. These individuals are nearly always "accredited investors" as defined under the Securities Act of 1933.
Angels typically invest their own funds, unlike venture capitalists, who manage the pooled money of others in a professionally-managed fund. Angel capital fills the gap in start-up financing between "friends and family"—who provide seed funding—and venture capital. Although it is usually difficult to raise more than a few hundred thousand dollars from friends and family, most traditional venture capital funds are usually not able to consider investments under $5-10 million. Angel investment is a common second round of financing for high-growth start-ups, and accounts in total for more money invested annually than all venture capital funds combined.