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One man’s recession is another man’s opportunity — at least here in Silicon Valley. The latest local unemployment numbers are terrible, which is entirely unsurprising given all the layoffs in technology and a wide range of other industries. Santa Clara and San Benito counties lost 14,900 jobs in January, a decline of 1.6 percent in one month, according to a state study (which, bafflingly, counts rural San Benito County but not San Mateo). Now, 9.4 percent of the potentially working population in the region is unemployed.

Most news coverage of this and other dour economic statistics seems gleefully focused on the mindless fear part. But here’s more positive news that I gathered yesterday at early-stage venture firm Y Combinator’s AngelConf conference on angel investing — and it’s what anyone who understands market economies will tell you. The event was hardly full of pessimism, as successful investor as successful investor got up to discuss their own strategies and experiences, to help potential angels who attended take wing.

Here are some reasons for optimism: In Silicon Valley, more talented people are looking for work, fewer bad ideas are getting funded, office space is becoming cheaper and more plentiful. Regional office vacancies could rise to 27.5 regionally with rents falling by 25 percent, according to a recent report by Oakland-based Foresight Analytics. Why is this good? Google made significant expansion in head count and square footage during the dot-com downturn in the early part of this decade, taking advantage of the fact that its growth and business model were maturing even as larger rivals suffered, as long-time Google engineer and prospective angel investor Matt Cutts told me at the event. The other prospective investors I spoke with — ranging from younger entrepreneurs who have recently sold their first company, to early employees at now-public companies with cash from decades-old public offerings still in the bank — echoed similar thoughts. “I couldn’t believe how much empty offices space I saw on the way from the airport,” said one grizzled technologist YAY who had flown down from Seattle for the event.

The Google anecdote is no doubt already well-known to most of our readers, and it helps explain why the event was packed (registration was also closed beforehand due to limited space). Certainly, the consensus in the room was that angel investing is not for the faint of heart these days — it’s something you do because you’re passionate about startups and innovation. And the event “was part training session, part confessional, part group therapy,” as August Capital’s David Hornik wrote on his blog afterwards. But of course everyone in the crowd was there to make money. As serial angel investor Reid Hoffman wrote recently in a Washington Post opinion column, many leading brands started in hard times: Microsoft, MTV, CNN, FedEx, Intel, Hewlett-Packard, Burger King, etc.

For those who didn’t attend, who are interested in angel investing, check out the recorded video or the quotes below, as excerpted from the post by Hornick and from serial entrepreneur/investor Steve Poland’s coverage. VentureBeat investor Aydin Senkut, who spoke at the event, has a post with his takeaways here.

  • Don’t worry if the idea seems crazy — if it didn’t seem crazy, it would be too late to invest as an angel. (Paul Graham)
  • The lifeblood of angel investors is deal flow — you need huge deal flow to find enough stuff that is worth investing in; The best deals come from other angels. (Naval Ravikant)
  • Don’t be afraid to throw a little dynamite into the status quo and see what comes out of it — often times interesting stuff emerges (and sometimes nothing does). (Michael Dearing)
  • The Rule of 12 — you need to invest in 12 companies to have statistical diversity — invest in fewer than 12 deals and you run the risk of them all failing. (Mike Maples)
  • One-third of your companies will go out of business. Failure is part of learning process. (Ron Conway)
  • If your goal is making money, this isn’t your thing. (Dave McClure)