You could consider them high-stakes versions of Kickstarter.
While the popular crowdfunding site allows users to pledge money to entrepreneurs’ businesses and projects, sites like FundersClub, MicroVentures and AngelList–profiled in the Wall Street Journal–kick things up a notch (no pun intended).
For instance, the minimum investment on AngelList is $1,000, and the platform that hosts the investments on AngelList allows up to 95 angel investors with a net worth of over $1 million, or with annual income exceeding $200,000 for more than two years in a row, to contribute to startups.
For those outside the startup world, angel investors are high-net worth individuals who invest in small startups and entrepreneurial projects. Contrary to venture capitalists, they generally give one-time cash injections, and they aren’t looking to make too much money off their investments. They’re often friends or family of the entrepreneurs in question, but they can also be found through alternate channels–like AngelList.
The site raises red flags for some angel investors, who place a premium on face time with a company before investing. But messaging is very clear: The site states upfront that investments made through AngelList are very risky, and that investors should expect to lose their money. It also divulges that it doesn’t verify company info provided by entrepreneurs.
Of course, sites like AngelList are extremely high risk. For the rest of us, there’s always Kickstarter.