Good news for tech, software and other types of entrepreneurs seeking startup or early stage business funding: Angel investor groups are feeling more optimistic than they have in years, and investments are up 23 percent year-over-year, according to a first-ever survey of angel investor groups in the U.S. conducted by the Angel Capital Association (ACA) which included angel groups of all sizes and investment interests nationwide. What's more, the number of angel groups operating in the U.S. and Canada has jumped 67 percent in the last six years.

The 2007 ACA survey is the best inside look at angel investor preferences ever done. So what most interests angel investor groups right now? By a big margin, angel leaders say they prefer to invest in seed/startup companies (80%) and early stage firms (85%), over expansion (22%) and later stage companies (5%). Interests span many industries, but these are today's top 10:

1. Medical devices
2. Software
3. Biotechnology
4. Business products/services
5. Electronics & instrumentation
6. Healthcare services
7. Industrial/energy
8. IT services
9. Networking & equipment
10. Telecom

Few angel investment groups specialize in a single industry, and most have interests and expertise among their member investors spanning a broad spectrum of business types. Geography, however, is crucial. Most angel groups prefer to invest in businesses based nearby. About half define that as within a 4-hour drive, and 25% say they'll consider anything in their region (midwest, southeast, etc.).

Business.com's "What Works for Business" blog is a great way to keep up with the latest solutions, trends and strategies for small and medium business -- including angel investor opportunities.

Action Steps
The best contacts and resources to help you get it done

Tips & Tactics
Helpful advice for making the most of this Guide

• Angel groups come in many forms, but generally share these traits: Members help screen firms and commit to a certain amount of investments yearly. Groups meet regularly (often monthly) to hear investor presentations. Member angels decide individually whether to invest in a business or not.
• While angel group sizes vary widely, investments typically range between $250,000 and $750,000 -- a level not generally served by venture capital funds.
• Angel groups typically look for co-founders (rather than individuals) and management teams who have proven skills and experience; a unique product or service with a competitive edge, large market and a clear, workable plan; evidence that you've invested substantially yourself; potential for a strong return.
• Once you locate an angel group, expect a lengthy process that includes an initial application, a "first cut" quick pre-screening, a full screen that includes one of the member's becoming your champion; a pitch meeting where you present to the entire group; and extensive due diligence.

The official source of Angel Investor Preferences Right Now is
the Online Venture Capital Communities page at Business.com