Still, becoming an angel remains an attractive alternative for many wealthy investors, particularly because the usual alternative investments, like stocks and bonds, are less welcoming these days. And many angels say that they still see plenty of investing going on.

John May, managing director of the New Vantage Group, a Vienna, Virginia, firm that runs several angel groups, for example, said that deal size at his organizations is the same or bigger than in the past—and members are itching for more opportunities.

Take James Hunt. A member of Active Angel, one of May's groups, Hunt already has stakes in about 12 companies, and plans to invest "less than $100,000" in another five or so companies this year.

Ian Sobieski, managing director of the investment group Band of Angels, in Menlo Park, California, said he generally makes one to two investments a year and expects to do the same in 2008. Band members put money in 12 to 14 new companies in each of the past four years.

In some cases, angels say they're investing because they haven't taken much of a hit or don't have their cash tied up in previous deals. In others, they're looking for alternative places to put their money.

"The stock market isn't that attractive. Real estate isn't that attractive. Bonds aren't that attractive," says Rosenfeld. "Angel investing offers people a different option."

They also tend to take modest positions. Sobieski said that most angels only invest a tiny part of their total portfolio—no more than 5 percent—in new ventures.

Many angels also get a boost from organized angel funds like Rosenfeld's. His two-year-old enterprise pools $25,000 to $50,000 contributions from members and invests in about four companies each year.

Other groups, like Active Angel, also aggregate money from members, but investors are allowed to opt out of investments they don't like.

In either case, there's safety in numbers, since fellow angels help with due diligence on companies and tend to seat one of their own on the board. "I know there are extremely competent investors who are watching out for my interests," says Hunt.