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Bands of Angels

Angel investors are getting together-and acting like VCs.

This story appears in the October 2006 issue of Entrepreneur. Subscribe »

Angel investors have existed mostly as a loose network of wealthy individuals looking for businesses to invest in and sometimes mentor. In recent years, however, angel investing has become more sophisticated, with angels forming groups to pool financial resources and investment expertise-and occupying a niche once filled by venture capitalists.

Even federal lawmakers are joining the action: A recently introduced bill in Congress would offer a 25 percent tax credit to angel investors. Another bill would establish an angel-investment office at the SBA.

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