Carson Conant, CEO of Chicago-based Mediafly, an Internet-based podcasting service, said he presented to numerous different angel groups, and frequently it seemed more like a social event with many participants seemingly wholly unprepared to write the large checks he needed.

Conant said Keiretsu was the most professional of the bunch, and one of its members ended up putting $125,000 into his company.

"I had people that would comment on the business with no interest in investing in anything," he said.

In the Bay Area, the Keiretsu Forum funded fewer companies for less money in 2009 than 2008, while Menlo Park-based Band of Angels Fund, which has 125 members, did more deals but for a smaller total outlay.

"There's less money available for startups, so the ones we are seeing are high quality," said Ian Sobieski, a Band of Angels founder and managing director.

Knox Massey of Angel Atlanta said that local angel investors have been focused primarily on protecting current investments, but angel groups that had the foresight to establish dedicated investment funds "have been extremely busy, both from a quantitative and a qualitative standpoint."

Dan Mindus, vice president of Virginia-based New Vantage Group, a fund manager for angel groups, said the amount of investing through his organization dropped in 2009, but has picked up pace significantly lately.

"As traditional venture capitalists continue to shy away from early-stage opportunities, we see a greater number of high-quality companies," he said. "This has intensified the competition for angel financing, meaning that companies must have great products, compelling markets, stellar teams, and attractive deal terms."

Troy Knauss of the Piedmont Angel Network in North Carolina said that the quality of early-stage deals has dropped in quality, although there have been more later-stage opportunities.

"In terms of quantity, deal flow is higher than ever with more and more entrepreneurs and workers trying to find a way to make money," Knauss said.

That can be a mixed blessing, Knauss said, because there are more bad deals, and the odds that really good deals will fall through the cracks increase.

Keiretsu member Jack Porter, a serial high-tech entrepreneur who has been researching the state of the venture industry, contends that the stars have aligned in favor of the angel investor.

There is mounting evidence, he says, that there are too many venture firms looking to make large investments, and that they need huge payoffs on individual companies in order to make their funds' overall performance attractive.

"What's going on here is an area of the market has come out of this that is a really good opportunity for angels, and not a good opportunity for venture capital investors at all," he said.

From the 1980s to the present, the number of venture funds has grown from 653 to 1,622, with the average fund size ballooning from $53.7 million to $350.7 million, he said. The number of years from investment to exit has also increased, and 10-year returns, by which venture funds are typically measured, are dropping.

Not only has the initial public offering become a problematic exit strategy, but 95 percent of all mergers and acquisitions of private companies occur with a price tag under $25 million, and 97 percent occur with a $35 million or less price tag, Porter said.

The cost of starting many kinds of companies, meanwhile, particularly technology companies, has dropped.

Numerous angel groups have seen their membership grow. Williams said his organization added 51 members to its Northern California chapters in 2009—and 80 percent had a net worth of $10 million or more, where the average for the previous eight years was $8 million.

Founded in 2000, Keiretsu now has 18 chapters, including four in the Bay Area and a new one in Madrid, Spain. Keiretsu is planning an exposition of Chinese companies looking for investments in Oakland, California, this month.

One new Keiretsu member is Barry Nelson, who founded a high-tech workplace safety monitoring company in San Carlos, California, called DBO2 Inc. in 2001 and sold it in early 2008 to Industrial Scientific Corp. Nelson was focusing on golf and not looking to become an angel, but joined Keiretsu in September upon the recommendation of a friend. "I am looking for opportunities to make investments very early in the process, contribute more than money, and get them liquid quickly," Nelson said. "This might mean smaller deals and more hands-on work for me and my network."

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Patrick Hoge writes for the San Francisco Business Times.