The conventional definition of a Business Angel has been:
“an individual investing their own capital in an unquoted business with which they have no prior (especially family) connection and to which they make a value-added contribution through active involvement in the business”.
The Global Entrepreneurship Monitor (GEM) survey has blurred the distinction between the ‘classic’ disinterested business Angel investment and kinship and affinity-based ‘family and friends’ money to the extent that no more than 10% of informal investment reported in GEM may meet the definition of classic Business Angel investment.
Local culture also plays a part, with Angels in some countries much more likely to form syndicates with family members, and to invest in business they have a family connection to.
The growth of Angel syndicates and equity crowdfunding has also thrown doubt on the continuing relevance of this definition. Within European Angel networks, groups and syndicates (and those of other countries outwith the USA) a large proportion of members seem in practice to be relatively passive in terms of both the investment process and post investment support of investee companies. Most of the “work” is done by a small number of “Lead Angel” investors. This, at least in part, reflects the nature of many of the European Angels, who are often still in some form of full time employment and do not have the time to take on the lead investor role. It also reflects the growing number of individual Angels that are now likely to syndicate in any one deal. Too many for all of them to be particularly active in the process.
Angel investing is very much a personal activity. An individual voluntarily choses to invest their own money in companies they select. It is extremely rare to find an individual who is a full time Angel investor (some individuals are full time Angel group / network managers), so the activity is typical practiced on a (very) part time basis, and could be likened to a “hobby”. Angel investing is often also referred to as “informal” investing, and this combination of self-motivation and determination within an informal framework is often a key attraction to individuals to become involved.
Angel investors also have varying motivations. Many Angels do not have profit maximisation as their principal motivation. They may simply like being involved in the process, or being part of the Angel club. As a result, it would be inappropriate to suggest that there is one “correct way” to be an Angel investor, and attempt to enforce a rigid training structure on all. Just because an investor does not adopt a particular technique or strategy does not mean that they are a “bad investor”. For example, while many would recommend Angel investors mitigate their high risk by having a large portfolio of investments (and this advice is likely to form part of an Angel training program), if the investor is investing for largely non-pecuniary reasons they likely, and to them rationally, don’t care about optimal portfolio sizing. If investors are not trying to maximize their financial returns, then there is no reason for them to have large portfolios. Some may specifically want smaller, concentrated portfolios because they enjoy working closely with the entrepreneurs or just want to invest locally so that they can give back to their community.
The traditional, “western” definition of an Angel is increasingly being diluted – and this is a good thing. It allows more individuals to be comfortable bringing increased amounts of capital to fund new and expanding ventures.
 Bridget Unsworth who manages the New Zealand Angel Co-investment Fund estimates that as few as 5-7% of Angels in groups are truly active Angels.