Once they’ve raised money from friends and family to help fund your business, Start-ups often turn to the angels to find money. Angel investors are. according to Guy Kawasaki, ‘Broadly definedhigh net-worth individuals who invest in entrepreneurial companies, usually at an early stage.’ Angels often help you get from that early stage to a point when you can take money from venture capitalists.

Last year I wrote about David Rose, one of New York City’s most well known Angel investors. and his speech at NY Entrepreneur Week. This year at NY Entrepreneur Week, I learned of an different resource the ‘AngelList .’ It is run by Babak Nivi and Naval Ravikant. the team that run the Venture Hacks blog. They are angels and advisors with a history of investments in startups like Twitter, Disqus (which powers the commenting at Inc.com), and more. They’ve also started companies like Epinions.com. AngelList has over 70 investors who have said they’re looking for plans.

I asked Nivi and Naval several questions start-ups should ask when considering Angel Funding. While they are more familiar with investing in tech companies, much of the advice is quite relevant to any start-up considering raising money.

Howard Greenstein. How does a start-up know when it is ready for Angel funding?

Venture Hacks. If you’ve just got an idea, check out incubators like Y Combinator and TechStars. Or you might be able to convince someone who knows you well (a former boss or family member) to invest. Or you might be able to convince someone who knows the market really well (they’ve had the same idea as you) to invest if they believe in the team.

If you’ve got amazing pedigree and connections (your last company was acquired and the investors made money) you might be able to raise money on just that alone. If investors are clamoring to invest before you start raising money, you can take this route, otherwise, you can’t.

Otherwise, build something (anything), put it in the hands of customers and get some traction before raising money. Any hardware/software/whatever startup can do this thanks to lean startup and customer development techniques and the decreasing costs of doing *everything* — the exception is startups with predominantly technical risk. Also get some social proof (brand name advisors) before contacting angels. Social proof lubricates getting in the door.

HG. Once you’ve decided you’re looking for angel funding, how do you find one?

VH. 1. AngelList or 2. Ask your friends who’ve raised money.

(Author’s note: Also ask your financial, legal, or accounting advisors for people in your community who might be appropriate angels .)

HG. What should an entrepreneur look for in an angel investor?

VH. Make a quick decision (spend a total of 2-3 hours with the angel). Make sure he understands he is lighting his money on fire when he invests. Ensure he doesn’t want control, e.g. a board seat and doesn’t want 50% of the company for an angel investment; all the angels in aggregate should take 5-20%. The angel should want to do simple convertible debt or a standard term sheet, and has a lawyer who does startup deals. You can reference them through past investments. It is a bonus is if he or she adds value with good advice and intros starting at your first meeting, and doesn’t need to see additional investors on board before investing.

HG. What are the Cons of taking money vs. self-funding or boot strapping?

VH. Cons of raising money: Possible control and signaling issues. You’re bringing on business partners you can never fire. You have a duty to your investors and you can’t shut the company down because you feel like it. You’re thinking about spending money instead of making it.

HG. How about the Pros?

VH: Pros of raising money: Money. If the investors are value-add, they’re essentially paying you to advise you. The additional social proof of being funded can help with recruiting, customers, marketing.

An additional thought: If you raise money, it’s harder or impossible to take a small exit from your business, or run it as a cash business. However, you’re more likely to swing for the fences and therefore have a slightly greater probability of a home run outcome with your business.

HG. Thanks for sharing your thoughts with our readers.

Have you raised Angel Funding, or are you an Angel investor? Weigh in below.

Related information about how to find an angel from Inc.com.