Micro Angel Investors Are the Future of Startup Funding

How leveraging the power of small checks can make a big impact to build companies and create generational wealth

Startup funding is evolving and growing past its reliance on venture capital. Founders are finding alternatives and taking control of their businesses with the help of what I call, “micro-angel” investors…people who make small investments from $100 — $4,999.

Micro-angel investment didn’t exist until a few years ago. To understand why, here’s a short history lesson.

After the 1929 stock market crash, the Securities Act of 1933 was passed to protect investors from losing money. It ensured transparency in financial statements and restricted access to high risk investments to accredited investors.

Accredited investors were expected to be financially knowledgeable and in need of less protection given by regulatory disclosure filings. Which simply means they had to be educated and smart about investments, aware of the dangers and be ready to handle the possible losses. The belief was that people with lower incomes were safer not venturing into the uncertain waters of investing.

The SEC requires an accredited investor to have a net worth of $1 million. Or an annual income of $200,000 or more for the past two years — $300,000 in combined annual income for spouses. Financial entities like banks, insurance companies, brokers and trusts are also regarded as accredited investors.

Anyone that could not meet these requirements was regarded as a non-accredited investor. About 10% of Americans are accredited investors. Although the SEC was trying to protect investors from losing money, they made it impossible for the non-wealthy to get in on early-stage investments. It also made it hard for businesses without access to high-end angel investor networks to raise money which is the reality of many Black founders.

Not only were entrepreneurs limited to who they could raise capital from, but this law was effective in helping the rich get richer (through access to better, higher yielding, higher risk investment…