Angels, super angels and impact angels (original) (raw)

Stairway to heaven? rethinking angel investment policy and practice

Journal of Business Venturing Insights, 2020

Angel investing has grown globally across economies, accompanied by growth in both academic and policymaking interest. In this paper, we critically analyse the current state of knowledge about the process and impact of angel investment. We use a series of stylised facts to highlight key trends as well as misperceptions about those trends. These include the rise of formal and ad hoc angel groups, the efficiency of early stage risk capital markets, the complex interaction between angel and institutional venture capital, and policymaking to address perceived capital market failures. We review the emerging literature on angel investment returns and draw on a new simulation-based analysis of tax incentives to challenge the rationale for government intervention in angel investing.

Angel Investors Around the World

SSRN Electronic Journal, 2016

We document that the choice between disintermediated individual angel investments and intermediated private equity and venture capital investments depends on legal, economic, and cultural differences. We find evidence of this using PitchBook's comprehensive data on more than 5,000 angel and 80,000 private equity and venture capital investments in 96 countries from 1977 to 2012. The data further indicate that investee firms funded by angels are less likely to successfully exit through either an IPO or an acquisition. These findings are robust to propensity score matching methods, as well as to clustering standard errors and excluding U.S. observations, among other approaches.

Business angels: who they really are

Strategic Change, 2009

Financing is a critical issue for the survival and development of small and medium-sized enterprises. Business angels play a key role in financing these enterprises, especially innovative ones with high growth potential. Business angels fill the gap between founders, family, and friends on one side, and institutional venture capital funds on the other side, as a financing source. Business angels invest a large amount of money in seed, start-up, and early-stage enterprises.Business angels are important for small and medium-sized enterprises because they provide more than money. They are hands-on investors and contribute their skills, expertise, knowledge, and contacts in the businesses they invest in. They are wealthy persons with great business experience, willing to invest and offer their wealth and knowledge to owners and to entrepreneurs to start or develop their businesses.Business angels like to remain anonymous, so many ideas cannot be implemented. To address this issue, many countries establish business angel syndicates and networks to facilitate the process of matching entrepreneurs and business angels.Financing is a critical issue for the survival and development of small and medium-sized enterprises. Business angels play a key role in financing these enterprises, especially innovative ones with high growth potential. Business angels fill the gap between founders, family, and friends on one side, and institutional venture capital funds on the other side, as a financing source. Business angels invest a large amount of money in seed, start-up, and early-stage enterprises.Business angels are important for small and medium-sized enterprises because they provide more than money. They are hands-on investors and contribute their skills, expertise, knowledge, and contacts in the businesses they invest in. They are wealthy persons with great business experience, willing to invest and offer their wealth and knowledge to owners and to entrepreneurs to start or develop their businesses.Business angels like to remain anonymous, so many ideas cannot be implemented. To address this issue, many countries establish business angel syndicates and networks to facilitate the process of matching entrepreneurs and business angels.Copyright © 2009 John Wiley & Sons, Ltd.

Business angels as a research field

Handbook of Research on Business Angels

This is the third volume of the Edward Elgar Publishing book series 'Handbooks in Venture Capital'. 1 This volume focuses on Business Angels (BAs), that is, 'high net worth individuals, acting alone or in a formal or informal syndicate, who invests his or her own money directly in an unquoted business in which there is no family connection and who, after making the investment, generally takes an active involvement in the business, for example, as an advisor or member of the board of directors' (Mason and Harrison, 2008, p. 309). Our knowledge of BAs is now more than three decades old and our understanding of the phenomenon has gradually increased over this time (Landström, 2007; Landström and Mason, 2012). Nevertheless, some researchers have pointed out that this knowledge and understanding is highly fragmented-the field seems to have moved from providing 'no answers' to presenting 'a flora of answers' about the nature and activity of BAs (Shane, 2009). It is therefore important to take stock and synthesize our knowledge about BAs. This is the purpose of this volume of the Handbook of Research on Business Angels. A further need for this Handbook arises from the expectations that politicians and policy-makers have been directed to the BA market over the past two decades as a solution to the financial gaps that have been identified among new and entrepreneurial ventures around the world. Consequently, the BA market has, and continues to attract, considerable interventions by policy-makers. However, most of these policy initiatives have been made without being anchored in the knowledge that has been developed about the market. Thus, a further objective of this Handbook is to compile and synthesize our knowledge in a way that is helpful to policy-makers. 1.2 THE IMPORTANCE OF BUSINESS ANGELS As a phenomenon, private individuals who invest in high-risk projects have existed since the origin of economic activity in society. For example,

Angel Investing: A Literature Review

Foundations and Trends® in Entrepreneurship, 2017

Even though scholars have amassed a large body of research on angel investors, few systematic and comprehensive reviews are available. The purpose of this monograph is to review this literature and then to offer suggestions for future investigation. To that end, we compiled a set of journal articles on angel investing. We start with Wetzel's (1983) seminal article describing the characteristics of angel investors and end with the work published more recently. In total, we have 152 articles that we review. For parsimony, we chose to focus our review only refereed journal articles, thereby excluding conference proceedings, books and book chapters, industry reports, and dissertations. This implies that there is additional work that has been done on the topic

Angel network affiliation and business angels' investment practices

Journal of Corporate Finance, 2018

This paper provides preliminary evidence on the effects of membership in an angel group or network (AG/BAN) on the investment choices of business angels. Using a proprietary dataset containing qualitative and quantitative information on 810 angel or angel-group backed investments on 619 companies by 330 unique business angels from 2008 to 2014, we show that AG/BAN membership generates valuable information, networking, monitoring and risk reduction effects, which ultimately affect the amount of personal capital committed by each angel investor and their equity stake in the investee companies. These results extend our knowledge of the investing behavior and characteristics of business angels, a funding source that is rapidly gaining prominence in support of new ventures and the development of the global economy.

The View of Angels From Above: Angel Governance and Institutional Environments

Academy of Management Perspectives, 2018

Compared to scholarship focused on venture capital, we know less about angel investing and, in particular, less about how angels operate across institutional environments. Given the importance of angels within early-stage entrepreneurial investment growing globally, the field of angel governance is poised for further investigation. Thus, in this paper, we begin the conversation on angels and institutions and provide a framework for studying the post-investment governance role taken by angels amid institutional variation. First, we provide a review of the research conducted on angel-centered corporate governance. We then explore how the regulative, normative, and cultural-cognitive institutional domains may influence angel governance arrangements. Within these domains, we isolate how the extent, frequency, and mode of angel engagement with the target venture can be shaped by the institutional environment.

The economic significance of business angels: toward comparable indicators

Handbook of Research on Business Angels

The importance of access to early-stage finance for fostering high-growth innovative entrepreneurship has been widely acknowledged in the literature. Business angels are believed to be one of the most important sources of funding for such early-stage, high-risk, highpotential ventures. However, their contribution to firms and to the economy may well go beyond that. In principal, four types of contribution can be distinguished: 1) Increasing the supply of financial capital. In countries where evidence of the scope of business angel activity is available, the data indicates that business angels provide as much capital to firms as formal venture capital investors and finance a great many more ventures (e.g., Gaston, 1989; Mason and Harrison, 2000; Sohl, 2012). Thus, business angels contribute directly to increasing the flow of finance to firms. Furthermore, not just the quantity of finance provided by business angels is important, but also the type of finance. By primarily providing small amounts of finance in the early stages of a firm's development, business angels play a unique role in the SME finance landscape. 2) Contributing to a venture's ability to attract more financing. As business angels mainly invest equity capital, their investments contribute to strengthening the firm's balance sheet, in contrast to loan financing that weakens a company's finances. Business angel investment can also send positive signals to other investors and the market (provided that the firm succeeds in attracting the 'right' business angel), reducing some of the informational asymmetry and leading to lower perceived risk for other financiers (e.g.,