A small business investor is a lot like you, only with a lot more disposable income. Small business investors may even pool together capital from several high net worth individuals to form an Angel Fund.

This pool of capital is then used to fund the startup companies that make up the investment portfolio. Since the investments are diversified in this manner, a small business investor can afford to lose money on a single deal or even several deals, and still make a profit in the end if the other startups perform well.

It's all about making money

As with any type of investor, a small business investor is looking to make more money with the money that they already have. Sure it's nice to have the luxury of existing capital, but managing these investments is a full time job. Unlike you, this is what they do for a living, not as a side job.

Early stage investors spend a great deal of time weeding through new funding proposals looking for a great opportunity--and if the planets are aligned right, they might hit the next Google.

In the meantime, only a few of the deals that they fund will make them any money at all - most will go bust. But, as with anything, the gamble usually pays off in the end if they make more good investment decisions than bad. That means that they can't afford to make many mistakes - this is their primary source of future income and any mistakes will cost them dearly.

To help offset some of this risk, the majority of investors will do a great deal of research and analysis before funding any venture. They can't catch everything though! So, rest assured, any credible investment company is going to thoroughly check the facts before sending any money your way.