St. Paul-based RAIN Source Capital said it plans to launch 121 angel funds across the nation in five years.

The funds would be a minimum of $1 million in investment and expand the firm's reach in various regions starting with the upper Midwest and the Pacific Northwest. RAIN Source, which supports networks of angel investors in establishing angel funds, currently has 23 funds in six states.

Two of the 121 funds would be in the Twin Cities area. David L. Welliver, president of financial consulting firm WellAdvised LLC, is leading the effort in raising the funds, which he hopes to close in a year.

"We're seeing a long term trend, where venture capital (firms) are funding later stage growth (companies). So, there's a gap between very early seed stage investing and when VCs will even consider an early stage company," Welliver said. "This is one way of helping fill that gap."

Some venture capital firms said they have shifted their funding to later stage growth companies in medical technology because bringing the product to commercialization has become longer and more expensive.

RAIN Source said it expects to have individuals match the fund through side by side investing, which would increase the amount of investment to possibly $240 million in capital.