In the world of small business entrepreneurship, especially technology startups in Silicon Valley, a standard process has evolved dictating how to raise money to start a company. Similarly, in the mass media era of political campaigns, a funding process is also followed, albeit far different from that of Silicon Valley. A national political campaign is expected to raise large amounts of money from a relatively small amount of wealthy donors, and then use that money for large media buys in a relatively small amount of media markets in order to win an election. The Obama campaign has completely dismantled that fundraising equation, and there’s much more to it than just small donations over the Internet. The Obama campaign’s fundraising approach in many ways mirrors the angel funding strategy of a Silicon Valley startup.

Let’s look at how a Silicon Valley start-up usually raises money. First, the entrepreneurs raise a small amount of seed money from friends and family—something to pay bills for a few months while ideas are made concrete, pitches are honed, and proof of concept demos are built. Since these amount to loans between trusted individuals, the seed money is usually paid back with only small (or no) interest. A startup can also secure loans from banks at this early stage. The loans will usually stay small because the company is unproven at this point.

Once more money is needed, angel investors are courted. Angels are wealthy individuals who provide large amounts of capital and usually ask for some ownership of the company in return. Angel investment will usually get a company through the first year. After the startup matures and needs to expand, it can then seek venture capital. The money raised from venture capital firms is significantly higher than from angel investors, and because the money is pooled and managed by an expert (the VC, or venture capitalist), the firm usually has some sort of say in company decisions and direction, in addition to equity in the company. A major point of comparison is that VCs get their hands dirty in the internal affairs of the company, while angel investors will usually not.

Looking at political fundraising, some interesting comparisons can be made. Venture capital firms can be likened to high-dollar donors, specifically those bundlers of high-dollar donations (Bush’s Rangers are a prime example). They’re able to donate large amounts of money, but they also expect a high and personally beneficial return when the candidate gets into office. Many high-dollar donors also insert themselves into the campaign, either by demanding the attention of the candidate, or more often, demanding the attention of campaign staffers by making special requests.

To be sure, the Obama campaign has raised plenty of money from high-dollar donors. Recently, Obama was in San Francisco at a high-dollar fundraiser and made a little bit of news in the process. But as has already been well-documented, the vast majority of Obama’s money comes from the enormous number of small-dollar donations raised over the Internet. One wonders why he even needs to go to San Francisco to raise high-dollar money these days.

The small-dollar donors that have fueled the Obama campaign throughout this primary season can be thought of as angel investors. Like angel investors to a start-up, they give their money, and what they want in return is a piece of the pie, where that pie is the campaign instead of a company. Most importantly, the piece of the campaign they desire is vastly different from what high-dollar donors demand. Obama’s small-dollar angels seek empowerment. They want to self-organize and own the campaign locally. And, in what is a major untold story of the 2008 cycle, the Obama campaign has been actively cultivating their small-dollar angels from the very beginning.

Back in early 2007, the Obama campaign launched massive rallies in cities across the country. Many observers likened them to rock concerts. What the stories missed was that Obama was doing more than building a list of small-dollar donors. The massive rallies were building a national network of people deeply invested in the campaign. Activists invested with their time and energy, not just their money.

I attended one such rally in Atlanta in April of 2007, along with 20,000 other people. Several things were striking. First, anyone who wanted to reserve a free “ticket” had to sign up on My.BarackObama.com, the campaign’s social activism network (some later rallies would ask for a small donation to reserve a ticket). There was no +1 or +2 option to bring guests. Every individual that wanted a ticket needed to sign up. When we got to the rally, those of us who had signed up and printed out our tickets (really just the confirmation email) were allowed to go into an area of the crowd closer to the stage. Those who had not signed up online were asked to fill out a contact form and were then ushered to an area further away from the stage. We were already seeing a return on our investment: if we had signed up on the website, we were given a better experience at the rally.

Before Obama took the stage, we were asked to do three things by the warm-up speaker:

1. Sign up on My.BarackObama.com if we already hadn’t
2. Sign up to volunteer in nearby South Carolina
3. Tell two friends about Barack Obama

During his 45-minute stump speech, Obama echoed the same points. There was no explicit ask for money at the event. The ask was to become heavily invested in the campaign, with an emphasis on investing time and energy. As 2007 went on, the Obama campaign continued with the massive rallies, and supplemented those with training camps around the country, getting activists even more invested in the campaign. When the voting began, these angel investors were leading the GOTV efforts in primary states and were organizing Obama’s near sweep in the caucus states. Winning, after all, is the best return on investment in electoral politics.