The funding came from AngelList, launched by entrepreneurs and serial investors Babak Nivi and Naval Ravikant. The group which includes 50 individuals is looking to invest $80 million in total this year according to reports.

Co-founder of Udemi, Gagan Biyani – who grew up in the Silicon Valley and graduated from UC Berkeley in 3 years with a degree in Economics – aims to democratise education so that anyone can teach over the Internet.

Is the sun setting on large lumbering VC firms unable to adapt to a changing world.

Has venture capitalism model of investment had its day after a decade of decline?

In venture capitalism, meaningful changes don’t take place overnight. Performance is often measured in decades. Unfortunately the results of the last decade make grim reading, not just for VCs but also for those start-ups who depend on them.

Since the dot-com crash, nowhere has this become more apparent than in Silicon Valley, the epicentre of tech innovation has become a valley of the dinosaurs for VC firms as their long-term returns continue to ebb away. The result is new companies starved of VC financing and advice.

The depressing reality for venture firms today is that the huge windfalls they brought in through investments more than a decade ago are unlikely to return. A recent report released by the National Venture Capital Association (NVCA) reveals that the situation in the US is much the same as in the UK.

Worse still, it is part of a long-term trend which shows little sign of recovery and anything like a return to those heady days of the dot-com boom. Even the NVCA themselves admit that the VC industry is contracting and will “continue to do so for the foreseeable future”.

Why? Because they know that the venture capital model of investing just isn’t working as it once was. The environment has become hostile for large scale venture capital firms. This has prompted a steady contraction in the industry and firms raising ever smaller funds and a reduction in the principal numbers at venture firms..

As the number of companies they invest in is reduced the so to does is the chance of a windfall from flotation. This will be catastrophic for venture capital firms whose financial model relies on receiving these windfalls and securing healthy returns for investors. The IPO market refuses to emerge from a decade of slumber and is unlikely to in the current climate so where will that vital lifeblood of returns on investment the industry relies on come from?

So with a further contractions in venture funding now inevitable, where does that leave the start-ups who rely on them? Well let’s look again at those web start-ups of Silicon Valley. Many are now finding other sources of funding including a proportion from angel investors who are smaller and leaner than their VC counterparts.

Also major success stories of the past decade like Facebook and Linkedin are so far reluctant to go down the route of flotation, instead preferring to keep their businesses out of public hands, which again has kept them off limits to VC investors who rely on flotation to make their money.

Also Internet businesses can now be set up much more cheaply than at the beginning of the decade and many of those that have emerged and become powerful businesses are buying up some of the smaller outfits.

Another threat comes from the smaller, more agile fund type investments supplied by business angels. Angel investors in comparison to large VC firms are more agile and better able to swallow smaller returns on investment offered by emerging internet ventures.

Angel investing may be the perfect fit for those emerging companies, however this may not be the case in other industry sectors which require the much larger investments venture firms offer. Herein lies a problem. Angel investors are able to fill the funding gap for companies with smaller ambitions, however investment creates jobs and with smaller investments comes fewer job opportunities.

What is needed is a more agile, leaner approach to funding which business angels are better able to offer, but one that is better organised and able to withstand smaller returns. The alternative is to allow those businesses to survive and evolve on their own and invest at a later stage when the risk involved lessens.

The funding comes from a group of angel investors, including: Mitch Kapor (founder of the Lotus Development Corporation), Mark Goines (Mint.com board member), Dave McClure of 500 Startups, Steve Anderson of Baseline Ventures, Saar Gur at Charles River Ventures, Travis Kalanick, Auren Hoffman, Brian Norgard, and Dan Gould.

Flowtown aims to  bridge the divide between traditional email campaigns and social media. The service transforms a list of email contacts into meaningful demographic and socialgraphic data — instantly showing a company who their customers are and where they spend time on the social web.

Since its launch in November 2009, the company reports 35% month-over-month customer growth with more than 15,000 businesses now using the service.

Angelsden co-founder, Bill Morrow

Bill Morrow, Angelsden co-founder and former city banker, set up the UK speed funding pioneers in 2007 after several years researching the business angel market.

He remains a firm believer that plenty of funding exists out there for good business ideas. He also believes that most business angels will see a return on their investment inside three years…

What does the Angelsden investment group offer that others don’t?

Angelsden connects entrepreneurs and companies that need funding with angel investors providing a successful ‘investment ready’ service for entrepreneurs. We brought a radical new model of angel investing to the market place, which is still only three years old. We made it accessible to the person-in-the-street.  We do not vet companies looking for funding and we have no minimum funding requirement.  However we do provide free advice to companies or those with ideas and do tell them if their idea is not investable.  Those with investable ideas are then put through our investment readiness program which includes free advice from a leading accountancy and leading law practice.

We are fast, straightforward, transparent and get results.  These clear messages resonate with both entrepreneurs and angel investors as this might not have been their experience of angel investing to date.  We are open and accessible to all new businesses and we don’t push deals – we let our angels select the deals they want.  This means that deals that we don’t expect can get funding.

Raising money for a business has previously been a stressful, intimidating and expensive process for many people and Angelsden set out to change that. We pioneered SpeedFunding, based on Speed Dating, where entrepreneurs pitch to a business angel individually on a one-to-one basis, seeing up to 12 angels at one session.  We are still the only company in the UK to offer this pitching format so SpeedFunding events are generally oversubscribed. Their success is attributed to the chemistry that starts to evolve during a face-to-face chat between the entrepreneur and angel, which simply doesn’t happen when an entrepreneur presents to angels ‘en masse’.

Is it better for your average business angel to join a group rather than going it alone?

We make it easy for business angels, who often haven’t got the time to go searching for new ventures.

We stay in close contact with our angels and know many personally, including their investment wish lists.  For our top angels, we offer private viewings of selected businesses and we run angel masterclasses to cover areas such as EIS, due diligence and how to value a company.

As a high net worth individual, why would I choose to be a business angel as opposed to putting money in another asset?

Some angels are successful business people who are looking to expand their portfolios, broaden their business risk or re-invest their profits. Others are retired self-made individuals who are looking to keep their grey matter active. Still more are interested in helping start-ups and small businesses to succeed. There really is no single reason that motivates a business angel, but the one thing that they all have in common is a desire to fund only those ventures that have the potential for great success.

It’s probably good to have a spirit of adventure as well!

How long on average do your members take before they exit an investment?

It really depends on the organisation and the agreement, but most angels would expect to see a return in three years, some less, but no more than five years. Bearing in mind that no returns can be guaranteed, an angel investor could ideally expect to double their money over a period of around two years, or treble their money on a period of around 3-4 years. Another way of looking at this is to say that they can expect a cumulative return of approximately 50% for each year of the partnership. Of course the reality is often quite different, depending on the quality of your investment decisions and the assistance you are prepared to give a business to ensure its success.

What is the success rate of businesses who receive funding through Angels Den?

Our role is fundamentally as match-maker ensuring that businesses with a good idea and a good business plan have the opportunity to access funding but that doesn’t mean that we aren’t interested in the final outcome.

We know that following our SpeedFunding events, where up to 225 individual pitches will have been made in one evening, entrepreneurs, on average, will then have at least three angels interested in having further discussions with them.

Much as we would like to know the outcome of every meeting, it is not always possible to follow up each meeting that takes place a year between entrepreneurs and investors.

We have 15 case studies on our website of companies who have successfully secured funding through Angelsden. Some companies and often angels prefer not to be profiled as they do not want the publicity for reasons including they do not want their competitive advantage to be promulgated or where a dilution of family control would make news and we are not left with very many to case study.

What are the benefits of speed funding for the angel investor?

SpeedFunding gives an angel investor the opportunity to meet up to 12 companies, on a one-to-one basis, who are looking for funding and have a solid business plan in place. All the entrepreneurs will have received significant guidance from Angelsden including attending ‘Pitch School’ so they are equipped to give a good presentation with the facts and figures that an angel investor needs to hear.  There is also a good networking opportunity at the end of the session for angel investors to speak again with companies that interested them as well as network with other angel investors.

With bank lending restricted are you seeing more businesses seeking help via Angels Den?

The economic climate has been excellent news for angel investors. Traditional business funding sources such as banks and venture capitalists have greatly cut back their investments, opening up a huge funding gap that is being filled by angel investors. Small businesses are continuing to launch, although valuations are down, so angels have found that they are able to achieve a higher shareholding in their new relationships.

What’s the next stage in the development of Angels Den?

We have Regional Directors across the UK and are now in the process of expanding our regional teams further and we are planning more SpeedFunding events to support the Clean Tech industry.

We already hold SpeedFunding events in Singapore, followed shortly by Malaysia and Hong Kong, Angels Den is also researching the Middle East market with a view to holding events there, then planning activity in North America, Russia, China and more  – watch this space.

It's a jungle out there for business angels and start-ups without the right contacts.

Businesses are starting up everyday but many remain starved of the vital funding and help they need to grow. Business angels are supposed to help plug the gap but what methods do angel investors use to find the businesses they choose to invest in?

It isn’t especially hard to find things these days. In the 21st century pretty much everything you need to know about established businesses and the people who own them can usually be found online.

Just tap in a combination of either an individual’s name and company name or address and in seconds – unless that business is cut off from civilisation based in deep in the tropical rainforests of Borneo – you will soon find what you are looking for.

But what if that business is a start-up or seed stage business? And one that has yet to set up a website, with an owner who has little or no online coverage. For all the potential angel investor knows, that business might as well exist beneath the canopy of some remote rainforest.

The problem then for business angels – who are a fairly secretive bunch – is finding the right opportunities out there, somewhere. This is no easy task when all the usual methods of finding information simply don’t work.

One possibility is to join a business group on networking websites such as Linkedin. You’ll find a stream of pitches from people all over the world asking for financial backing. Here you have the opposite problem, some of these may turn out to offer a great opportunity, but you would need to devote a great deal of your time sorting through the online jungle to discover whether they are genuine.

The trouble is being faced with too many opportunities or too few.

You might also try backing someone you know. But if you don’t know anyone starting up a business anytime soon you would trust to make good use of your cash, the best way to find opportunities is to join a network.

Before you go ahead though it might be worth finding out how the network sources its investment opportunities. Despite all the websites and online business groups that have sprung up in recent years the method your average business angel network uses to find businesses may surprise you.

A recent report by the UK’s Department of Business Innovation and Skills found that the most common method for recruiting entrepreneurs and business propositions used by business angel networks in the UK wasn’t through the Internet, websites or even through events – the most common method by some distance remains good old-fashioned word of mouth, with referrals from banks also featuring highly.

Even more surprisingly websites and information fairs rank third and fourth and articles in the press didn’t feature at all. This tells us a lot about the way business angel investment works in the UK. Despite all the hype about speed funding events taking place around the country and a few notable successes, business angel investing is still rather informal compared to VC investing.  Often it is a case of who you know including a high proportion of friends and family and old fashioned networking.

Many entrepreneurs who don’t know a business angel are likely to miss out on potentially valuable funding and advice for their business as a result and the business angels themselves will miss out on a potentially lucrative opportunity.  Despite a number of business angel groups becoming established in the UK in recent years, the sector remains low key.

Those involved in the promotion of business angel investing need to promote themselves more widely and raise awareness of what they have to offer. There should be more transparency surrounding investment failures as well as successes so that those individuals who want to invest can navigate their way through the jungle with more confidence and advertise what they have to offer to those start-up enterprises vital to the recovery.

With the government continuing to dither over how to help small businesses obtain funding and angel investors becoming more choosy, a new business called Funding Circle, an online marketplace has been set up to fill the funding gap. Businesses can now obtain funding from private investors direct, though it will involve a number of charges.

The business was launched on Friday and allows small businesses to apply for loans of between £5,000 and £50,000, to be paid back over a one or three-year period. Typical interest rates charged to borrowers on the loans will be between 6% and 9%, with borrowers also paying the website a £50 application fee. Those small businesses will also have to pay the company 2% of the amount borrowed, so it could prove costly.

The tax credit, was signed into law by the state Governor M. Jodi Rell. The income tax credit equals 25 percent of a cash investment, up to a maximum credit of $250,000. However critics of the scheme say that the qualification bar has been set too high at $100,000 for most business angels to take advantage.

Husband and wife team Neil and Janet Allday attempted to secure £75,000 for their One Dress, which can be worn in 10 different ways. However the couple left the Dragon’s Den empty handed after failing to impress the panel.  Unshaken, the Alldays have managed to attract the attention of a German TV shopping channel which they hope will see their product a hit in Europe.

SBA were recently named 2010 European Business Angel Network of the year by EBAN. SBA has 50 members from 18 countries with an interest in early-stage local, national, and international start-up projects. The group’s has combined expertise in finance, ICT, Bio, and Energy.