Angel Investors:  SEC Definition

The SEC defines an Accredited Angel Investor in Rule 501(a) of Regulation D under Rule 144 of the Securities Act

This definition includes certain institutional investors and (a) any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000 at the time of purchase; or (b) any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and who reasonably expects reaching the same income level or greater in the current year.

Common Definition of Angel Investors

Beyond this legal qualification, it is someone who invests their own money into early-stage companies.   The primary distinction between an Angel investor and a Venture Capitalist is that the Angel Investor is investing their own money instead of a fund’s.  People who invest in Angel Deals typically do not do it as a full time job like a Venture Capitalist does.  Their investing behavior is more akin to someone who invests in the stock market but does not do it full time as a professional trader.