Vanderbilt Law Review

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Where do entrepreneurs turn for funding once their credit cards are maxed out, friends and family are no longer taking their calls, but it is still too early for venture capitalists to invest? They turn to "angel" investors. Angel investors are wealthy individuals who personally finance the same high-risk, high-growth start-ups as venture capitalists but at an earlier stage. Well-known angels include Microsoft co-founder Paul Allen, EDS founder H. Ross Perot, and Dallas Mavericks' owner Mark Cuban. But the prototypical angel may still be rich old Uncle Joe, the wealthy, distant relative or family acquaintance. Angels come in many forms, yet together they constitute an essential source of entrepreneurial finance, providing some $25 billion to new ventures each year. Not only are angels important for the amount they provide to new start-ups, but for when they provide it-at a crucial stage in the start-up's growth that allows entrepreneurs to build the financial bridge from friends-and-family funding to venture capital.