New blood vessel formation is an essential part of wound healing to provide cells with the nutrients and oxygen for their survival. Many nonhealing ulcers fail to heal because of poor blood supply and skin grafts will also fail to take on poorly vascularized wound beds. There is a real need for proangiogenic biomaterials to assist wound healing. In vivo heparin binds proangiogenic growth factors and helps regulate new blood vessel formation, hence heparin containing biomaterials are attractive. To achieve a hydrogel with high heparin binding capacity a composite of chitosan, poly(vinyl alcohol) (PVA) and polycaprolactone (PCL) was produced. Chitosan is a biodegradable natural polymer with great potential for biomedical applications due to its biocompatibility, high charge density and nontoxicity. PVA is biocompatible and nontoxic with good chemical stability, film-forming ability, and high hydrophilicity. PCL has physicochemical and mechanical properties comparable to those of the biological tissues and due its hydrophilic nature helps in the sustained release of drugs. Accordingly in this study we explored a range of PCL concentrations from 4% to 16% added to hydrogels composed of chitosan and PVA. Heparin was blended into the polymer mixture and the nanoporous structure was created by freeze-drying the PCL hydrogel. The physical properties of the hydrogels were evaluated by Fourier transform infrared spectroscopy (FTIR) and XPS confirmed the presence of sulfur on the surface of the hydrogels. Their porous morphology was investigated by scanning electron microscope (SEM). The Chick Chorionic Allantoic Membrane (CAM) assay was used to study the angiogenic potential of these materials and histology (H&E and Goldner trochome) was used to confirm the presence of new blood vessels inside the hydrogels. We report that the addition of 8% PCL to the hydrogels gave porous structures containing heparin, which significantly increased new blood vessel formation into the hydrogels. These hydrogels offer a new approach to biomaterials, which could be added to wounds to improve vascularization.