Benjamin Wayne, chief executive officer of Fliqz, a provider of video hosting solutions for Web sites, agrees. Wayne, who has founded four companies since 1995, divides potential angel investors into two categories, amateurs and professionals. Wayne says the amateurs tend to invest based on what feeds their egos and become mercurial about their investments. "Angels often make emotional decisions based on very little data," he says, "which would be almost funny if they didn't have the ability to wield enormous influence over the management teams of their start-ups. It can truly be a case of the inmates running the asylum."

Professional angels, on the other hand, are often people with serious operating experience. They can be very good at guiding early-stage companies through their initial growing pains, providing management experience, brokering early partnerships and mentoring first-time executive teams.