Many businesses in the US are funded by angel investors.  These angels come in three flavors.  First, there are "big league" or experienced angel investors.  They have a significant net worth (usually >$5-$10million), and have extensive experience either as entrepreneurs or investors or in the financial services industry.  Second, there are the doctors and lawyers, folks who live off of a lucrative cash flow and who love to be "in the high stakes game" of technology entrepreneurship.  Third, there are the "3F's" - Friends, Family and Fools.  (There are those who think the 3F's should just really be Fools, Fools, Fools).

Some of my thoughts on Angels:

• Successful Angels are priceless
• Find successful people in the Big Leagues - their experience is key and they make great investors
• Angels can be MUCH better investors than VCs
  
• They're willing to fund businesses with a smaller, but still lucrative, end market
• They're willing to go earlier stage than VCs (very few VCs will do a seed round)
  
• Friends, Family and Fools, is there a difference?  DON'T TAKE THEIR MONEY
• Be wary of the Doctors and Lawyers - they're excited until the going gets tough
• You want savvy investors that make you look good for the next round of investors, which may be venture investors
  
• Don't take money from your family
• Having "Daddy" as your first investor does NOT help you to get the next investor
• However, if family members are savvy investors who join in a sizable round, that "can" be okay
  
• Don't take money from people who can't afford to LOSE IT!
• A great angel investor has a $10million+ total investment portfolio, with $1million+ in private equity and is looking to do about 10 private equity deals
• Never accept an unaccredited investor!
• Yes, the lawyers will tell you that there is a "max number" of unaccredited investors that you "can" accept under certain  exemptions, but JUST SAY NO
• Unaccredited investors are too small, can't afford to lose the money, and if you  need paperwork signed for a transaction that requires investor approval (and this will be every major transaction after the first one!) you will be at great risk if those unaccredited investors don't sign.  Many times you cannot get to all your investors
• We had an investor who retreated to an ashram in India and another one who passed away (and the estate wasn't all arranged yet)
  
• Plan for the fact that it's a pain in the rear end to corral all your investors