[ajju]

If this is 100% of your savings put at least 300K (50%) in something safer than a startup and be prepared to lose the other 50%. If you are not, ratchet down the amount you want to invest to something you can afford to lose without feeling too much pain.

-The remaining 300k is still more than enough for an angel investment in 3 startups.

-Don't rush into investing if you haven't done it before. Read everything pg has written. Go to angel events like angelconf but also to tech events in the areas you are interested in investing (conferences, barcamps, mobilecamps and so on) so you get to see something more substantive and 'real' than a pitch from the founders. (E.g. Zimbra did a lot of demonstrations of their products at events as technical as USENIX).

-Invest in the team, not (just) in the idea.

- Someone else mentioned that startup founders prefer someone who offers not just money but a rolodex and/or advice. This is true for smart founders. You may not be able to contribute to web startups but there are startups in your areas of expertise (compilers, semiconductors) that have potential. I personally know of two: www.accelereyes.com and www.coreopsys.com (no personal affiliation except friendship with founders) - although neither is in the bay area. I am sure there are others like them.