ABSTRACT
This chapter presents an introduction to the angel capital market and an overview of the response of the Small Business Administration to its shortcomings. The angel capital market operates in almost total obscurity. An angel is a provider of risk capital to small, private firms. By risk capital we mean private equity capital. The chapter discusses angel investors and the market for angel investment. A related argument for encouraging angel investors is that the structure of venture investments may be inappropriate for many young firms. The heterogeneity in the angel market means that it is very hard to come up with general statements about how the market operates. The chapter examines the rationale for public policy and discusses the Angel Capital Electronic Network (ACE). ACE-Net is a reinvention strategy that responsibly utilises recent changes to small business securities regulations, and makes use of technology to develop a new nationwide equity market for United States small business.
