And while venture capitalists focused on biotech, software, and industrial energy, angel investors focused on Internet startups, healthcare, and mobile. Which makes a lot of sense, given the massive disparity in investment size required for those sets of industries.

The cause of the shift in funding?

VCs invested less due to unfavorable IPOs such as Groupon in late 2011, and Facebook mid-2012, as well as concerns about additional taxation on capital gains due to fiscal cliff fears and the presidential election. On the other hand, crowdfunding grew, according to Startups.co, on the strength of the JOBS Act passage in April — and simply due to the fact that Kickstarter and Indiegogo campaigns like Ouya’s have raised millions of dollars, demonstrating that crowdfunding is a viable way to launch a product or start a business.

One other very interesting stat is Startups.co’s listing of the top angels of 2012, which is headed by 500 Startups’ Dave McClure:

1. Dave McClure – $16.6 million
2. Ron Conway – $10.2 million
3. Reid Hoffman – $4.15 million
4. Chris Sacca – $1 million

Here’s the full infographic, along with a detailed view of all the big funding stories of 2012:

photo credit: Images_of_Money via photopin cc

He may also take the prize for most F-bombs per sentence of any investor.

I caught up with McClure at the GROW 2012 conference in Vancouver yesterday and spent a few minutes asking him whatever popped into my head. Here’s the interview.

VentureBeat: What’s your favorite startup right now?

Dave McClure: Favorite startup right now that I’m not an investor in … if AngelList is considered a startup, that would be my favorite.

VentureBeat: Gotcha — I know you’ve got a passion for AngelList. I heard that today.

Dave McClure: Totally! Actually, full disclosure, I’m an advisor.

Favorite startup in our portfolio — all my children are beautiful [Laughs] — right now, recent favorite I would say probably Refer.ly. Danielle Morrill — I’m really psyched about what she’s doing. Some older ones that I love: MindSnacks, AppStack, Dulio, SendGrid.

VentureBeat: What’s the hottest space to invest in right now?

Dave McClure: [Laughs] That’s such a lame-ass fucking question.

VentureBeat: Yes, it is! [Laughs] But I’m still asking it.

Dave McClure: Hottest space that I think is interesting would be education, particularly like ages 3-10.

VentureBeat: Most clueless founder question you ever got?

Dave McClure: Oh, that’s like … that could be its own show!

Hmm … most clueless founder question … I don’t want to be too harsh, but understanding basic shit that’s on Venture Hacks or AngelList or something like that. There’s a lot of available information online … basic term sheet stuff or valuation.

VentureBeat: What are the three most important things for startups to get right?

Dave McClure: Customers, problem, and don’t spend too much time on it.

VentureBeat: Best investment ever?

Dave McClure: I think right now that looks like Wildfire, an investment I made when I was at Facebook Fund, and it looks like a 40-times or 50-times return … $350 million exit.

VentureBeat: The biggest cause of startup failure?

Dave McClure: Taking too long to ship or not listening to customers.

VentureBeat: What’s the startup you thought was stupid but ended up rocking?

Dave McClure: Boy, there’s a long list of fuck-ups I’ve made in not investing … stupid is kinda harsh … probably AirBnB, because they had the cereal box thing, and I’m just, like, I’m not getting it.

VentureBeat: You’re in Vancouver quite often. What’s the best thing about Vancouver?

Dave McClure: This view is fucking amazing … we’re looking out at Vancouver harbor right now, which is gorgeous, astonishing.

VentureBeat: What’s the thing that pisses you off most about the recent Twitter API changes?

Dave McClure: Ahh … haven’t been following it too closely and I don’t think it’s necessarily irrational … it’s just like they decided to make some relatively hardcore decisions on how their developer community operates, which is quite different from how it used to operate.

Understandably, I know a lot of people are pissed off, but understandably, I think they need to figure the business model also. Maybe not my choice, but … I get it.

VentureBeat: What’s the most important thing you learned when you were at PayPal?

Dave McClure: Offline anything is expensive. Online is much cheaper usually to do almost anything.

VentureBeat: What’s the one thing you want a do-over on?

Dave McClure: Last 20 years? [Laughs].

Ahh … probably the opportunity to invest in Fab, Uber, LivingSocial, AirBnb … all those I had very significant opportunities with the founders — at least most of those I know personally — and totally fucked that up. [Laughs]

Image credit: John Koetsier

That’s how Dave McClure started his talk today at GROW conference in Vancouver, Canada, where he’s already been busy investing. He’s been doing a lot of speaking in Canada lately, having just recently flipped off Montreal’s tech entrepreneurs.

McClure is focusing internationally this year, in Brazil, India, and Mexico. His incubator program, 500 Startups, recently merged with Mexico’s Mexican.VC.

After starting with typical flair and a warning “there will be lots of swearing,” McClure talked about making venture capital work better and how 500 Startups picks and works with its startups.

The first is not a challenge, apparently: ”It’s pretty easy, ’cause most VCs suck balls.”

Rates of returns for VCs are horrible, says McClure. He likes a few, including Sequoia, Union Square, and Andreeson Horowitz, but most do not make money.

500 Startups works differently by making make lots of little bets … as many as 200 investments per fund. McClure wants to be right about 20 percent to 25 percent of the time, but he usually only achieves significant success — $100 million exits — on only 20 percent of its investments.

When looking for new entrepreneurs, 500 startups is looking at up to six different factors:

1. Introductions (Are the founders crazy, liars, or idiots?)
2. Product (Does it work?)
3. Market (Are there people who use it?)
4. Revenue (Will people pay for it?)
5. Growth: (How can you scale?)
6. Finance: (What will it cost to get customers; when and how do you make money?)

In addition, when looking at startup teams, McClure wants to see at least three skillsets: hackers, hustlers, and hipsters. Hackers are developers and engineers, hustlers sell and marketer, and hipsters design and build out the user experience.

The shift McClures is seeing (or embodying) is traditional VCs (white guys in suits, apparently) becoming a guild of geeks, mentors, and angels. The legendary PayPal mafia — of which McClure is a card-carrying member — comes to mind.

Entrepreneurs coming to incubators or angels, McClure says, can impress potential investors with trusted referrals (which enable simple due diligence), a functional prototype (which shows that there may be a good team behind the product), and actual revenue (which proves that there’s a market and customers).

Once a company is accepted into an accelerator, it takes a while to sort out winners and losers.

“In six months you’ll know if they don’t suck. In one to two years you’ll know if they’re awesome,” says McClure.

Bonus: Random Dave McClure quotes

“VCs are idiots. Founders are also idiots.”

On accelerators: “It’s not sane, it’s not stable. But success emerges not because of you but because of the environment you create.”

“If you have a choice between being a founder or a VC, be a VC. It’s a way better gig.”

“Be early and contrarian or late and right.”

“I’m better than probably 90 percent of the people out there. Doesn’t mean I’m smart, probably means I’m lucky.”

“Winners win, losers lose, tweeners tween.”

The companies are listed below, along with a brief description of what the founders are up to. Definitely stay tuned, as it will be interesting to see how many of the companies are the same on Demo Day, as they are today. It’s not uncommon for a complete pivot to happen during the course of startup school. Just ask Console.fm.

Twilio, SlideShare, ColourLovers and Plancast are just a few of the dozens of companies that have passed through the 500 Startups accelerator, or have received funding.

Here’s a list of the latest batch, with company descriptions in their own words:

300 Milligrams: 300 Miligrams is a priority inbox for team conversations.

72 Lux: 72 Lux offers consumers a universal checkout and personalized shopping experience while also offering a white-label version for publishers.

BrandBoards: BrandBoards is bringing Google Adwords simplicity and reach to live event digital advertising.

BrightNest: BrightNest  is the Mint.com for home maintenance. We help homeowners manage their most valuable asset with customized tips and reminders.

Cadee: Cadee helps golfers understand and improve their game.

 Central.ly: Central.ly wants to connect all of the social media profiles for small business owners.

Chorus: Chorus is customer feedback without the hassle. Automatically extract meaning from thousands of customer messages as they arrive in real time.

Conta Azul: Conta Azul is a web based SaaS accounting system for Brazilian SMB’s.

Contactually: Contactually is a personal assistant for your professional email contacts that connects directly with your CRM.

Dress Rush: DressRush is a ”Gilt for Weddings” Dress Rush is making Bridezilla’s everywhere clamor to get couture without the cost. Up to 100% off retail ain’t bad, right?

 eSpark: eSpark Learning is “Pandora for education” and creates custom playlists of super fun education apps on iPads for elementary school students.

Farmeron: Farmeron helps farmers across the world to manage their production data online and to do automatized farm performance analysis using exciting statistics.

Fileboard: Fileboard is a service accessed from the iPad that helps manage files and attachments across email, Dropbox, Evernote, and other cloud repositories.

Fitocracy: Fitocracy turns fitness into an addictive gaming experience where you level up in real life.

Forrst: Forrst is where developers and designers improve their craft and companies come to hire them.

Gizmo: Gizmo is a cloud-based multichannel marketing platform for mobile, tablet, social, and web.

GoVoluntr: GoVoluntr is a social platform that brings together volunteers, nonprofits, and businesses to solve today’s social problems.

Hapyrus: Hapyrusoffers the easiest way of leveraging Hadoop to make your system highly scalable.

HighScore House: High Score House turns a child’s routine into a game, making the lives of families easier and more positive than ever before.

Intercom: Intercom lets web businesses build powerful, personal relationships with their users, turning them into loyal customers.

LookAcross: LookAcross helps you to have more conversation by improving your odds of connecting with people.

LoveWithFood: LoveWithFood is the easiest way to find culinary deals & samples, curated by a community of foodies for foodies. For every deal, we donate a meal.

Meloncard: MelonCard removed your personal information from companies selling it.

MeMeTales: MemeTales is a mobile game like reading platform for kids. Fun like Angry Birds without the guilt. Meme Tales is a DEMO ’11 startup.

MoPix: Mopix is going to define what the movie experience can be on tablet devices and make distribution accessible to anyone with film or video content.

OneSchool: OneSchool is a free mobile app that connects students to the people, places, and things around them. OneSchool was an Alpha Pitch startup at DEMO ’11.

PayByGroup: With PayByGroup, ever front money for group purchases again. We coordinate your friends’ payments to the merchant so you can plan activities hasslefree.

Redeemr:  Redeemr helps businesses and celebrities get un-ignored by their social media fans.

Rotadosconcuros: Rotadosconcursos is the best test prep to get in to the government positions.

Spinnakr: Spinnakr says, Website targeting triples your conversions, but you’re probably not using it because it’s too complicated. Spinnakr makes it possible.

Swithchcam: Switchcam recreates the concert experience by combining and syncing fan-recorded videos.

Talkdesk: Talkdesk  lets your company have a contact center in the browser. It provides information about the caller by integrating with services such as Salesforce and Zendesk.

Tiny Review: Tiny Review is Instagram for Yelp reviews. The fastest and funnest way to say what you think about a place.

WeddingLovely: WeddingLovely is building tools and directories to promote amazing small and independent wedding vendors.

In honor of the Halloween reveal, 500 Startups put together this video tribute Michael Jackson’s Thriller. Watch it, if you dare.

[Image: Thomas Hawk/Flickr]