As a reasonably successful entrepreneur, i frequently get lunch invitations from extraordinarily bright and energetic startup founders who seek my advice (for whatever that's worth) and, inevitably, my money as a private individual or "angel" investor. I rarely say no to lunch (even though I'm buying), rarely say yes to investing, but I always find the stories fascinating.

I'm fairly certain that a would-be angel investor has better odds of making a killing by taking his or her $50,000 to a Vegas roulette table and smacking it all down on 22. Yet over countless lunches between friends, family, coworkers, roommates, and friends and family of all the above, tens of millions in angel money are invested each year, providing vital cash to embryonic startup companies around the globe.

The scudding economy has made the angel's role even more critical. With few exceptions, conventional venture capital firms are still reeling from the high-tech/dot-com implosion. Venture capital funds continue to plough money into life support for their existing portfolios of bad investments in the hopes (most likely vain) that the economy will rapidly recover and their companies can claw their way toward profitability. The venture capitalists that still have money to spend on new investments have gotten gun shy and are staying well clear of seed-stage startups in favor of more mature, revenue-producing operations.

Jon Flint, a managing general partner of Waltham, MA-based Polaris Ventures, which is one of the more successful East Coast venture capital firms, once opined to me that "like great artistic talent, the number of excellent, investable startups that emerge each year is a constant." By that principle, the current drought in seed-stage investing is just as irrational as the venture-financing exuberance of the late 1990s. Almost by definition, the next eBay or Microsoft must be out there, overlooked or ignored by the venture capitalists.