It is important that you limit yourself only to very close friends and family so that you don t run afoul of the federal and state securities laws. That means you shouldn t send an e-mail out at work or chat up people at cocktail parties. Consider only people you have a long and deep relationship with and who can afford to lose their entire investment in your company. If the company goes under, common stockholders will be the last to get anything out of liquidation. Not everyone is rich, or has rich friends and family.
Angels are wealthy individuals who invest their own money.
They may be investing solely for economic reasons or because they have a personal interest in the company or product. Because angels wealth and financial sophistication make them less in need of protection, the securities laws let you sell stock to them without a lot of hassle. Unfortunately, there is no formal network. To find them, you ll have to rely a lot on personal contacts in your community. An angel investor may go on his gut business instinct.