If you cash out of a flourishing small business, what's next? Another startup is likely to be all-consuming, yet retirement would probably bore you. For an increasing number of entrepreneurs, the middle ground is angel investing, in which wealthy individuals give financial backing to budding companies.

Last year some 227,000 angels (I volunteer to be number 227,001) in the U.S. pumped $23 billion into startups, up about 3% from 2004, according to the University of New Hampshire's Center for Venture Research. In 1996 there were only about ten angel groups in the U.S.; today there are more than 200. One reason for the growth: the void left by venture capitalists, who have started to favor larger, later-stage investments.

No school teaches angel investing, so newbies often earn their wings in typical entrepreneurial style - by the seat of their pants. We asked four veterans for advice they'd give to someone just getting started.

One thing they all agree on: Devote only a small portion of your portfolio, say 3% to 10%, to such risky investments.

Are you an angel investor? Have you been supported by one? Would you invest your money in a startup?

Read some other angel's investors stories...