Typically, an angel is a high net worth individual and often an angel investor is called a smart-money investor because frequently an angel will also be an accomplished entrepreneur and/or business executive with a wealth of valuable experience and contacts. Angel investors provide to startup and early-stage businesses some of the early-stage funding (and, in appropriate cases, other "value" that comes with the angel investor's business experience).
Angel investments usually would precede any investments by early-stage venture capital funds. Angel investment typically does not take place until after a company has already raised as much money as practicable from among themselves, their friends and family, the directors and officers (and, in appropriate cases) employees or other individuals known by the founders, directors or officers. Angel investment rounds are much more formal than the founders' round and any friends and family rounds completed by the corporation before the angel round. Angel investors do not require a business to be well-established before angels will invest in it. Angel investors desire to invest before a company has reached its potential. It is important for an angel investor to correctly judge the qualifications of the company's management team and examine the fundamental aspects of the company's business plan. Angel groups provide companies early stage capital, usually in amounts of less than $1 million.