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A Rising Culture of Middle-Class Angel Investors Are Enriching Themselves and Society

Angel investing has recently become a pastime for everyone from school teachers, to dentists, to art curators, to kombucha makers. Here's why that's a good thing.

Image credit: Max Pixel

In Dallas, Texas, an assortment of particularly risk-tolerant graduate students sat around a poker table. Most were University of Texas Southwestern medical students. Many dollars would change hands that night, with equal parts gains and losses. Ideas, too, would be exchanged. But unlike dollars in a poker game, the exchange of ideas is far from zero-sum.

Two of the players—MD/PhD student Gaurab Chakrabarti and MIT chemical engineering graduate student Sean Hunt—had a eureka moment. By discussing their mutual interest in the untapped industrial potential of enzymes, they came to a radical conclusion.

From Poker to Bioperoxide

Have you ever wondered why hydrogen peroxide-producing enzymes weren’t being used to take hydrocarbons out of the chemicals industry? Neither had anyone else until Chakrabarti and Hunt began to press each other on the question. They later founded the biotech startup Solugen, the world’s first and only manufacturer of bio-based peroxide solutions.

Solugen began in 2016 by marketing their product to pool, hottub, and spa owners as a superior replacement for phosphate-based cleaners. These clients, Alex Knapp reports in Forbes magazine, discovered that the bio-based cleaner was not just price-competitive, but also worked better than traditional cleaners.

“The enzymatic process that created the company’s bioperoxide also generated organic acids that cleaned out mineral buildup that can clog and corrode pipes over time,” Knapp explains.

The startup quickly expanded into making other superior products such as hand sanitizer and disinfectant wipes. “Because they’re made from plant starch, the wipes are biodegradable and don’t emit toxic fumes,” Forbes reports. And by far the largest market they’ve yet made a mark on has been the oil and gas industry, where their wastewater treatments are providing both economic and environmental benefits.

But its innovative application of biology to industry isn’t the only remarkable thing about Solugen. Valued at roughly $1 billion last year, the startup is not exclusively funded by wealthy investors like most successful startups of the past.

Rather, it was funded in part by users of the website AngelList Venture, a company giving would-be investors the opportunity to connect with promising startups. And Solugen is just one of countless innovative new ventures funded in part by a rising movement of individual middle-class angel investors who are taking the future into their own hands by finding each other on the internet.

The Middle-Class Angels

A characteristic feature of economic progress is that activities once achievable only by the extremely wealthy become available to a larger subset of the population. One example of this is the act of angel investment.

In just the past few years, the hyper-capitalist practice of angel-investing, once exclusively an opportunity for the connected elite, has been democratized.

The middle-class angel is such a new breed that Merriam-Webster still defines “angel investor” as “a wealthy person who invests a large amount of money in a new business.” But according to a recent New York Times article titled “Even Your Allergist Is Now Investing in Start-Ups,” Angel investing has recently become a pastime for everyone from school teachers, to dentists, to art curators, to kombucha makers.

This is partly because a plethora of new platforms on websites and smartphone apps are increasing the accessibility of the previously exclusive realm of startup profiteering.

In addition to AngelList Venture, a program called “Angel Squad,” Times journalist Erin Griffith writes, “is one of several ways that people from outside Silicon Valley’s investing elite are now joining the ranks of angel investors.” Another is the tech platform “Allocations,” which builds software that has helped over ten thousand individuals create or invest in small private equity funds.

In past generations, the overhead involved in discovering, coordinating, and vetting private investment opportunities was enough to keep away ordinary people. Only the wealthy members of well-connected communities could use personal agency to manifest technological visions of the future at scale through angel investing. But the cheap information sharing and network effects of the internet are now allowing ordinary people with some extra money and vision to allocate their capital in increasingly powerful ways.

“Overnight, the entire world just woke up and went, ‘Oh, wow, we want to go invest in technology,’” AngelList Venture chief executive Avlok Kohli told the New York Times.

Obviously, that’s an exaggeration, but the growing movement does signal a shift in the number of people with the agency to aim their capital at a prospective future of their choice instead of leaving such decisions to a tiny class of asset managers and venture capitalists.

The Expanding Scope of Capitalism

From the beginning, capitalism broke from all past economic systems by allowing large segments of the general population to participate in the funding of the future.

One of the primary innovations of the Dutch East India Company (VOC), which is commonly considered the first significant capitalist enterprise, was that it sought funding not just from elite kings and nobles, but from anyone who desired a cut of the profits. As the Stanford historian Niall Ferguson writes in his book The Ascent of Money, “Subscription to the Company’s capital was open to all residents of the United Provinces and the charter set no upper limit on how much might be raised. Merchants, artisans and even servants rushed to acquire shares; in Amsterdam alone there were 1,143 subscribers, only eighty of whom invested more than 10,000 guilders, and 445 of whom invested less than 1,000. The amount raised, 6.45 million guilders, made the VOC much the biggest corporation of the era.”

This and similar activity by other corporations that soon followed suit meant that large numbers of individuals, by choosing to invest a portion of their resources instead of hiding it away or consuming it, could entitle themselves to a portion of the world’s economic growth, and in choosing what sort of ventures to invest in would be getting a say in the shaping of humanity’s destiny.

In the following centuries, ordinary citizens were ever more frequently becoming capitalists in addition to laborers. As the economist Ludwig von Mises wrote in his 1958 work Liberty and Property, “A not inconsiderable amount of the capital employed in American industries is the counterpart of the savings of employees. In acquiring savings deposits, insurance policies, bonds and also common stock, wage earners and salaried people are themselves earning interest and dividends and thereby, in the terminology of Marxism, are exploiters.”

Here Mises is referring to Marxist “class war” doctrine, according to which capitalists parasitically “exploit” workers. With investment becoming more accessible, ever more workers are also becoming capitalists as well. Does that make them “self-exploiters”? The democratization of investment is one of many demonstrations of the incoherence of Marxism’s class war dichotomy.

As, Mises explains, “The common man is directly interested in the flowering of business not only as a consumer and as an employee, but also as an investor. There prevails a tendency to efface to some extent the once sharp difference between those who own factors of production and those who do not.”

Now, over four centuries after the rise of the Dutch East India Company, such opportunities to invest in publicly traded companies have proliferated to such a degree that virtually everyone on earth with any extra wealth at all is investing in something whether they realize it or not.

Whether you put your money in the stock market, a retirement fund, or even just an ordinary bank account to earn a small amount of interest, you’ve deemed it more profitable for your money to be invested in the progress of civilization than to simply keep cash in a dresser drawer or lockbox. This is the phenomenon of global capitalism.

Such proliferation of investment opportunities throughout the last few centuries is a big part of why the portion of the population in extreme poverty was over 80 percent during all of human history before the industrial revolution but is less than 20 percent today. Not just because people have gained new opportunities for profit, but also because of the massive economic and technological progress that the ubiquitous investment of capital has facilitated.

But as wonderful as the widespread profits from publicly traded companies have been, investment in private startup ventures has long remained too difficult and risky for all but a tiny elite population to engage in. Now, technology is prying open the gates even to angel investment so that a large portion of humanity can participate in private investment like never before.

And just like gaining the opportunity to buy shares in the Dutch East India Company made a large number of people more prosperous in the 17th century, gaining the opportunity to take part in venture capitalism is making a large number of people more prosperous today.

This new era of capitalism blooming in the 21st century will improve the lives of many of us and our children by improving the types of investment opportunities we have access to. But it will also improve nearly all our lives by helping to fund new technological, medical, environmental, and other forms of progress like nothing we’ve yet seen—or even yet imagined.

  • Saul Zimet was a Hazlitt Fellow at the Foundation for Economic Education. He writes about human progress, propertarian politics, and knowledge maximalism. Learn more about his work at