Angel investor group posting best year since tech meltdown.

The Tech Coast Angels investor group is on track to post its biggest year since 2000.

Through October, the venture network's investment in Southern California companies rose to $10.7 million, or 65 percent above the fun year of 2004. Tech Coast did first-round funding for 20 companies in the first 10 months of 2005, compared with 17 in all of 2004.

Tech Coast could match the $11.6 million handed out by its members in 2000, when early-stage investing was going gangbusters. The top year for the group was 1999, when the network handed out $15.2 million in startup funding.

A healthier venture capital industry and an improving technology sector are fueling this year's activity. "It's been a pretty stunning year." said John Morris, chairman of Tech Coast, which had its roots in Irvine but doesn't maintain an official headquarters. "The fact is we saw a willingness of venture capitalists to invest, and you kind of build on that confidence," he said.

Tech Coast members don't invest in any one startup as a complete group. Instead, they choose among potential investments on their own, with a handful of members typically getting together to put their own money in individual deals.

Angel investors target young companies. Venture capital firms tend to invest in later-stage startups, but also join early funding rounds when they feel a company's prospects for growth are good.

About half of Tech Coast's funding rounds include partnerships with venture companies.

Los Angeles saw 11 startups funded by Tech Coast members this year, compared with nine in 2004. Six San Diego startups attracted funding, up from five in 2004, and three Orange County startups have received funding, up from two.

Through September, venture investing was up 6 percent to $16.3 billion nationally, according to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.

"The venture capital industry itself is doing better," said Randy Churchill, director of business development for PricewaterhouseCoopers in Los Angeles. "I think it's healthy primarily because of the damage caused by the burst of the Internet bubble that has finally worked itself through the system."

Back in the late 1990s, business models that looked good on paper drove venture funding--even without the startups having any sales or customers. Today, angel investors fund startups that can demonstrate their businesses will work.

Morris said he will look at startups that have $100,000 in annual revenue and at least three customers. The changes have led to a slightly older crop of entrepreneurs getting funding. These founders also tend to have more experience than the crop of young entrepreneurs that propelled the tech boom.