Naval Ravikant, a serial entrepreneur, and Babak Nivi, a rebel venture capitalist, have been active angel investors for a long time. In February last year they decided that perhaps it would make sense to start an email list that would match startups looking for funding to wealthy investors — angels, as they are known in Silicon Valley parlance. So they started AngelList.

It is one of the more disruptive startup funding ideas to come to market. Thus far, the idea of angel investing has been constrained by the who-you-know factor. If you know the right people, and if you get the right introductions, then your chances of getting funded are much higher.

AngelList says to hell with that. Instead, they are creating a marketplace that allows the buyers (angels) and sellers (startups) to come together. It is a model that has been successful — so far AngelList has helped 200 startups raise money, Ravikant says. And even the size of the total investment dollars in each start-up is starting to become substantial enough to rival what has been a typical Series-A funding.

Up next: an index-fund approach to angel and seed investments. Naval says that most entrepreneurs want a specialist VC, mostly because they have connections and domain knowledge. AngelList will list the areas of expertise of angel investors, including the market they prefer to focus on. So if you are a startup chasing opportunities in the e-commerce sector, you can offer your business plan to angels who prefer e-commerce companies over, say, social games.

AngelList has benefitted handsomely from the exuberance around angel investing, and its growth mirrors increase in investor interest in Internet-related companies. It is not clear how investments in hundreds of startups, many of them chasing at best long-shot opportunities in the Consumer Internet sector, are going to pay off.

These are indeed scary times. Some blame AngelList for causing this angel feeding frenzy. I disagree. AngelList is nothing but a tool in the hands of angel investors. What it has done is remove the friction in the process of raising money. It has also helped angels look at more deals very quickly and process them even faster. The lack of due diligence, however, is what can upset the apple cart.

AngelList has come at a time when a lot of successful entrepreneurs have enough dollars in their bank accounts for them to take small fliers on other startups, all in the hope that one of them would turn out to be a Twitter, or in some cases the next best thing — a startup Twitter or Facebook wants to buy.

I don’t expect this frenzy to slow down anytime soon. The more we see big-dollar investments in companies like Facebook, Twitter and Groupon, the more we will see angels pumping dollars into startups, viable or not.

App of the day: CardMunch

If you get a lot of business cards, you have two options to get the information into your digital Rolodex: manually type the information or scan the cards. Now there is an app for that. CardMunch, an iPhone app that allows you to take a photo of a business card, uploads them to a server where the card gets transcribed and is sent to your address book and to your LinkedIn account. It is a very simple app, and a joy to use. LinkedIn liked the app so much that they bought it and made it free.

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