The fun thing about power laws is that they are fractal. Meaning that if you look at a random angel's investment portfolio, most of their returns come from just a handful of their investments. With a smaller pool, those investments may not be the giant monsters that VCs are hoping to get a piece of, but you should still be planning on a power law.
CB Insights says that 50% of seed companies will go away. And the reward that angels are given to take this risk is a 20% discount to the next priced round.
However, one of the benefits of writing smaller checks or running smaller funds is that you're less dependent on monster exits. For investors who are going smaller, valuations and terms do matter a lot more than at typical venture funds (that are very dependent on monster exits).