Mr Sohl agrees that there can be problems, cautioning would-be entrepreneurs to make careful inquiries into any prospective investors.

ECONOMIST: Business angels

As more small investors pool their money, knowledge and connections to dig up more and better deals, at least 170 angel groups now do business in the U.S., says Sohl, compared with a handful five years ago.

FORBES: Where Angels Dare to Tread

"Arguing about what the company is worth today is a much more emotional argument" than arguing about what the company will be worth in five to seven years, says Jeffrey Sohl, director of the Center for Venture Research at the University of New Hampshire.

FORBES: When Growth Dreams And Investors Collide