Angel funding

Technology start-up companies say they are increasingly turning to angel investors and their own resources as venture capital groups become increasingly reluctant to provide funding.

Kate Jillings, co-founder of BusinessBecause.com , a news and networking site for business schools, sold her flat to fund the business after deciding that it was not even worth trying to get VC investment.

"We had to weigh up whether to invest time in the business and growing the revenues or whether we chased investors," Ms Jillings says.

"We decided it was more sensible to fight for revenue than fight for funding. We initially funded it through our savings and debt. We got to the point where we had put so much of ourselves in the business, we didn't want to spend two months on the investor merry go round."

World on a Hanger and Empora.com , two UK-based fashion websites, on the other hand, have found that angel investors are often stepping into the gap left by VCs. Highly professional "super angels" - usually formerly successful entrepreneurs who are investing their gains back into the market - are becoming increasingly prominent in the market.

Empora.com, for example, raised money from Alexander Straub, the internet entrepreneur and investor. Robin Klein, Doug Richard of television's Dragon's Den fame and the Samver brothers in Germany are among the many others active on the angel scene.

"Risk aversion among VCs has grown. But for riskier deals there are now more internet savvy angels than ever to fill the gap," says Ari Helgason, co-founder of World on a Hanger.