As Locacorten found the article I pointed to quite useless I thought I should add more perspective on what business angels are.

Business angels are private investors, more often former or active entrepreneurs, who are investing their own money and experience into small start-ups. They are doing it for four reasons: money, playing a role in the entrepreneurial venture, some sense of social responsibility and last but not least for the fun and excitement of being involved in interesting projects.

Now, in which business stage should an entrepreneur consider this type of investment? Usually the process for setting up a business begins with the startup idea and the administrative expenses, then the money seeds for supporting the operations for a 6-12 month period. The source of this money can be the very own funds of the founders or the so-called love money (money from 3Fs - friends, family or fouls). Usually the love money is the largest money source next to the personal ones. There are of course disadvantages to using it - ideally the 3Fs would be silent partners. Some things to keep in mind - if you use the 3Fs be prepared to lose them (with the corollary that if you do business with friends be prepared to lose them as well), don't get them involved in the biz unless their experience is relevant and also have the divorce papers prepared. :) Other sources for money in the startup process can be grants, sponsorships or non refundable loans (a good example for Romania is Sapard)

Many would argue that banks would be the next logical one after all these sources have dried up. However, at least in Romania, banks ask for collaterals worth more than 100-150% of the total project value, and that would probably mean to mortgage your house or car. Quite risky I'd say. As such, in this context the next step are the business angels.

A typical profile of an angel is a middle aged male, reasonably wealthy, with hands-on entrepreneurial experience. They usually invest close to their homes (so search for locals - networking is key here), also early and small (<$100k) with a typical deal of a 1-1.5 years. If they're part of a group of angels interested in investing, the better. When asking them for money, you will have to keep in mind that they're not doing charity, they'll always look at profitability, exit options, and excitement coming from the nature of the project. It would be great if they could leverage their experience and contacts in the venture and that is the reason for their usually asking for an active role in the venture.

Now - how to find those guys? Networking like hell - usually referrals come from people they have invested in before, associates or friends. (remember the six degree rule - anybody is 6 degrees of anybody else in this world). Other ways to get them - industry associations, other entrepreneurs who benefited from this kind of investment (hence the role of the Romanian success stories mentioned in the previous post) or their associations. As far as I know there are also matching services (angels with entrepreneurs), I never used or saw one, but I am sure that a google search would reveal plenty of such services.

A final point I would like to make is about the difference between the angels and the VCs. The VCs invest other people's money, they somewhat don't get as involved in the venture's operations, they will always look for a thorough due dilligence and solid contract slowing down the investment process. Their main preocupation will be the return for the buck (aka ROI). The business angel invests his/her money, hence a rapid reaction and unsophisticated investment contract. Also they will get involved in the day-to-day operations and will care for the return as well for the excitement coming from the project.

I hope this gives more consistency to the Romanian article. Also, I suggest using the European Business Angels Network, there are at least two docs worth having a read: introduction to EBAN and thir activities (word doc) and the directory of networks across Europe (word doc)