With venture capital in the dumps, angel groups across the country say the quantity and often the quality of potential deals is up as entrepreneurs look for alternatives.

Angel groups—collections of high-net-worth individual investors, usually—in the San Francisco Bay Area, Seattle, New England, and Washington report companies appealing to them for money are increasingly far down the road in terms of having products and services. Yet prices are low.

The Alliance of Angels in Seattle actually had its biggest year ever in terms of investments, with members sinking $8.5 million directly into 29 companies, nine of them new investments and 20 follow-on.

"Almost two thirds of the companies we invested in were post-product, post-revenue, so the risk profile has really improved for angels," said Susannah Malarkey, executive director of the Technology Alliance, which runs the Alliance of Angels. "Valuations are very attractive, and that has made angels much more willing to invest."

Malarkey's experience does not appear to be the norm in terms of total dollars invested, but others report seeing similar trends in deal flow.

"We're getting some very interesting deal flow that would have gone to traditional venture capitalists in the past," said Randy Williams, founder and CEO of the San Francisco Bay Area-based Keiretsu Forum, which has 350 members in Northern California. "What's happening is the venture capitalists are focused on existing companies, and the limited partners are not giving them additional capital."

Molly Deringer, entrepreneur services manager at Investors' Circle in San Francisco, which has a membership that is two-thirds angel investors, said her organization saw "a substantial increase in the number of companies applying to present at our events, as well as the overall quality of deal flow in 2009."

"Companies were generally better prepared and a bit more mature than we'd seen in previous years," she said.

David Verrill, co-founder of the Hub Angels in Boston, said his group has a structured fund that has "really taken advantage of the 'investor-friendly' terms over the past 24 months."

"In terms of deal flow, it has never been heavier, and the quality has also improved—not too dissimilar from what our friends on the West Coast are seeing. There is a real lack of VC money," he said. Life-science deals in particular have ballooned in number and quality, he said.

Late last year, the Angel Capital Association surveyed its 150 member groups, and executive director Marianne Hudson said she was surprised when 59 percent said that the number of business plans they received and the quality of those opportunities was better or the same as 2008.

"I am hearing from many groups now that they have increased their investments at the end of 2009 and early 2010. Part of that is about improvements in the economy for investors, but I think that access to good companies for investment is also important," Hudson said.

The picture was by no means uniform. Some 16 percent who responded to the ACA's survey said that the quantity and quality of investment opportunities was down, while the remainder saw increases in deal quality or the number of opportunities, but not both.

To be sure, angel investing—which traditionally serves up financing in smaller slices than venture capitalists would consider—has not been immune from the financing downdraft. Though national angel-investing figures are not readily available, Jeff Sohl, director of the Center for Venture Research at the University of New Hampshire, said that evidence suggests the average amount of money angels are investing per deal has dropped even as the number of deals has risen.

Sohl's research into national angel activity showed that in the first two quarters of 2009 investment amounts dropped by 27 percent while deals increased by 6 percent.

"Nationally, the number of deals held pretty steady, but the size of deals went down," Sohl said. "The actual dollar allocation per angel is going down."

That can be frustrating for entrepreneurs.