Because often small investors aren't involved in the day-to-day of their portfolio, don't have information rights, and can invest without any real conflict? He

Because often small investors aren't involved in the day-to-day of their portfolio, don't have information rights, and can invest without any real conflict? Hell, the firm who put $6MM into our Series B is also the lead investor in our biggest competitor. That's a legitimate conflict. Worrying about an angel bringing $50K to the table is a waste of time - if it's really an issue, they'll be the ones to raise it.