Anecdotal evidence confirms that informal investors also operate in the UK but there has been no research to assess their role and significance in the financing of small businesses.

The research findings are intended to help efforts to enhance the operation of the informal risk capital market in the UK, notably by identifying ways in which the pool of business angels can be increased and highlighting improved methods of matching firms wishing to raise equity capital with informal investors.

So fervently do they believe in their collective imagination and potential that they routinely invest in one another's endeavors - $50,000 or $100,000 or $200,000 a pop, creating an informal high-tech investors' club that serves as a kind of market index of Internet startups.

A first round of venture capital was provided by Residex together with some informal investors.

So what's the protocol for approaching an informal investor such as a friend, mentor, or even a family member?

Ms. Rowland correctly notes that - at least for low-risk/low-return ventures - far greater sums of capital are available from "informal" investors than from highly selective venture capitalists.

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.