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4 Things to Consider Before Investing in Other Entrepreneurs Nearly anyone can become an angel investor. Decide if it's a fit for you.

By Steph Wagner

This story appears in the November 2016 issue of Entrepreneur. Subscribe »

A few months ago, in May, the government finally allowed the average person to become an angel investor. This change was known as Title IV of the JOBS Act. Technically speaking, it allowed "unaccredited investors" -- that is, individuals who have less than $1 million in assets, earn no more than $200,000 a year and are not professional investors -- to participate in crowdfunding campaigns in exchange for equity in a company. Maybe you've already done this, or at least have thought about doing it.

Related: Getting Started With Angel Investing

Is it a good move? That depends. You might be able to put money into the next Facebook…but the chances are low. My fear is that inexperienced investors will more likely bet the farm and lose everything. Now, hey, I know how entrepreneurs think: The greater the risk, the more potential for enormous returns. A lot of VCs think that way, too. But there's a smart way to go about it. Before you jump into an investment, consider a few methods used by the private equity world to increase your odds.

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