From the July 2014 issue of Entrepreneur

If the success of companies like Apple and Genentech was responsible for making tech a worthwhile investment and giving rise to the era of venture capital, it could be argued that later companies like Netscape and Google created today's golden age of angel investors--those who plow their new wealth back into their industries.

But how is an angel investment from Netscape co-founder Mark Andreessen different from one brokered by his venture firm, Andreessen Horowitz? It's an important distinction; an understanding of the rationale and potential conflicts for angel investments is crucial for entrepreneurs who are out pounding the pavement for dollars.

Angel investing has morphed significantly in the past decade. Angels used to be organized groups specific to a region or cause consisting of people who were interested in speculating on startups--think a neighborhood investment club on steroids. Often these investments had an economic development component or a sense of giving back to communities.

But the democratization of startup investing by the internet and deregulation has created super angels: wealthy individuals who actively participate in funding and building startups. These folks are pros, and many are connected to VC firms and large corporations that invest in or acquire new startups.

An investment from one of these super angels can create a false sense of hope. Entrepreneurs should not assume that a personal investment will ultimately lead to a deal with the angel's associated venture firm or parent company. In fact, I'd argue that the opposite is true: More often than not, an angel investment means that the startup doesn't fit the goals of the angel's affiliated company, due to stage, sector or size.

And let's not forget that angels face a potential conflict if they steer their VC firms to invest in or purchase a startup in which they have a personal stake. In fact, in some cases the angel may choose to not help the startup get a meeting with his or her firm specifically to avoid such a situation.

Of course, hybrid angels like LinkedIn's Reid Hoffman and Amazon's Jeff Bezos operate in a gray area, where their personal interests and day jobs collide. But if you want to be backed by Hoffman's Greylock Partners or acquired by Amazon, it's crucial to clarify with any angels whether their investment may kill the interest of their employers (or boards).

Angel investing is here to stay, and the people participating are no longer novices. But there are caveats, so make sure you understand the long-term pros and cons of taking that money.