Ask HN: How can startup founders afford to become angel investors?

I'm seeing a lot of startups raise money from angel investors - where the angel investors themselves are newer startup founders with companies < 2 years old.

Are these people just funneling money? My understanding is that if you take VC money your goal is to devote the entirety of that amount to make your company into a success. But that doesn't seem right because so many failed entrepreneurs are writing angel checks.