Scott as usual who does not run out of figures to better explain his thoughts presented a math calculation which pointed out to us the answer -- it isn't true. Angels don't really fill the gap.
If angels are filling a gap between friends and family and venture capitalists, then the maximum number of firms that are founded each year for whom angel capital could fill a gap between friends-and-family money and venture capital cannot be larger than the total number of companies that receive non–seed stage venture capital, which, tends to average fewer than 3,000 businesses per year.
Moreover, for angels to fill a financing gap between $100,000 and $5 million, then angels need to put that amount of money into businesses. However, most observers have found that very few angels do this, with the typical angel putting in $10,000 and the average angel investing $77,000.
Check out more of this interesting post by Scott Shane after the jump. Read here --The Funny Math of the Angel - Venture Capital Financing Gap.