Angel Investing is the industry term used to describe when a private individual invests money into a start up or early stage company before that company is public.   High net-worth men and women provide needed capital to entrepreneurs that cannot go to a bank to get because their company is still unproven.   Just about every company that ever went public, had at one point in time attracted the investment growth capital from individual investors.   And even in the case of flame out companies like WebVan, the angel investors in that deal made their money because they bought their shares at a lower valuation, say $1.00 a share, so that when the company went public, at say $25 a share, that investor made 25X their investment.   A $100,000 investment in a company such in that example, became $2,500,000.   That is how the rich get richer.   But it is never a sure thing so an angel investor must also be prepared to lose the full $100,000 if the company fails to execute on their strategy and go out of business before a liquidity event happens.   This is partly why the SEC regulates private equity investing in non-public companies and tries to ensure that only accredited investors make that type of investment.   Accredited investors have enough income or accumulated wealth that the government assumes they should know if an investment is good or not. 

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