Until recently, calling Ron Conway the consummate "angel" investor would not have been a compliment.

For years, venture capitalists viewed such investors as little more than technology dilettantes, rich hobbyists whose tenuous enthusiasm for a given company or sector made them unreliable stewards of profit and innovation. How times change.

Today many angels are respected and courted by VCs and entrepreneurs alike, occupying a prominent place on the continuum of investment capital. Perhaps no one in high tech is more responsible for that shift than Conway, who is known by some as the "godfather of Silicon Valley."

Of course, the factors behind the rise of angels -- the term dates from the early days of Hollywood and referred to individual investors in movies -- are multifarious. For one, the dot-com era and recent tech boom has minted a lot of millionaires who, having previously made fortunes in the business, are eager to earn future ones by betting on startups. Many VCs, meanwhile, have, because of their large funds, been forced to concentrate on later-stage companies -- big funds require big investments in pursuit of big returns.

Conway has flourished amid a huge swell in angel funding. According to the Center for Venture Research at the University of New Hampshire, angels in 2007 invested a total of $26 billion, up roughly 2% from the previous year, making this class of investors the largest source of seed and startup capital for companies in the U.S. Over the past decade Conway has invested in roughly 500 companies. Most notably, in 1999 he was one of the first outside investors to put money into Google Inc. Since 2006, Conway has worked with Baseline Ventures, which has exclusive access to his investments, as well as funds from other unnamed individuals. Conway typically makes investments of $50,000 to $100,000 in online video, search, behavioral advertising, consumer tech and other Internet startups (see adjoining chart).

Indeed, Conway's track record both as an entrepreneur and an investor has helped reform the reputation of angels, as well as set a standard for peers to emulate. Specifically, he popularized the idea of angel funds serving as a bridge to institutional venture rounds as startups grow. And among angels his network of VCs is second to none.

In an interview, Conway talks with The Deal about his investment strategy.

The Deal: How have the economics of angel investing changed since you took a chance on Google in 1999?

Ron Conway: The angel environment is even better now because the companies require even less capital, so the angel investors can get the companies even closer to working prototype and traction in the marketplace.

When the company transitions into the VC round, the chances of success are even better. For less than $1 million today, a consumer Internet company can prototype the product and introduce it to the marketplace to see if there's traction, and then go for another round of financing. All the companies in the Facebook application space would be great examples.

Proving a product in the marketplace now costs even less today because there are lots of places you can go to prototype it: the Facebook platform, the open social platform and on Google.

What types of statup companies do you invest in, and how many do you back in any given cycle?

I'm funding 40 to 50 companies each year. I focus on consumer Internet, video, search, social networking, behavioral targeting and gaming. I think those are the highest-growth sectors, and they are the sectors where I think the community in Silicon Valley is going to really be able to make a significant contribution, and because they're just really very interesting sectors.

Besides money, what can you contribute to a startup as an angel investor?

I can help the company round out their angel syndicate with other value-added angels and then help them build out their management teams with all my contacts and my Rolodex, help them hire a lawyer, an accounting firm, a PR firm. We have a whole cadre of firms that we work with that are the best in the business.

And then we help them on business development deals once the product is prototyped so that the company gets a commercial foundation started. We introduce the companies to MySpace, Facebook, Google, Yahoo!, IAC -- all the managements of these companies -- so we can get them the best foot forward on getting biz-dev deals closed, which is crucial.

How involved are you in the business of the companies you fund?

I connect the companies with the other people in the syndicate, and then I do the biz-dev intros. I work with Baseline Ventures very closely, and they support the companies a lot as well. They're an angel fund that has exclusive access to all my dealflow because I'm just a one-man band and I see five new deals a day. They help me process all the dealflow. They help me provide a whole wealth of services for the companies, and they extend my reach. They add value with mentoring, helping to build out the management team, doing business development and getting liquidity.

Where does most of your dealflow come from these days?

My dealflow comes mainly from the 500 entrepreneurs that I have already funded over the last 15 years. When the entrepreneurs and management teams who started those companies start their next company, they tend to think of me first because I funded their last company. If you take five people on each management team times 500 companies, that's 2,500 people, then you add their boards of directors, that's another 2,500 people.

How much and at what stage do you invest in a company?

My investments are $50,000 to $100,000, and that's in the beginning. I rarely invest in follow-on rounds. A lot of that is just capital preservation, so I can keep all my capital focused on the early, early startup stage, which is where I enjoy participating. And because I just enjoy investing at the seed stage, not in the later stage.

I just love working with entrepreneurs at the seed stage, when it's three really smart entrepreneurs with a great idea and watching that all mature.

Among the startup founders you've worked with as an angel, who would you characterize as ideal entrepreneurs?

A good example of ideal entrepreneurs are the guys at "Lonelygirl15." [Miles Beckett and Greg Goodfried, creators of the popular online video series "Lonelygirl15" and founders of digital production company Eqal Inc., which recently secured $5 million in Series A funding led by New York's Spark Capital.]

Miles and Greg didn't know a lot about the inner workings of Silicon Valley and the venture community, so I stepped in and helped them strategize their VC funding and show them the ropes of the venture capital industry and introduce them to a lot of the media companies in Silicon Valley. They're great people and very receptive to any help you can give them.