Abstract
The roles of business angels (BAs) are especially important in view of both decreasing the levels of formal venture capital investment and growing the average amount of individual deals. Angel investors typically invest at an earlier stage of growth and provide more business guidance than venture capital providers. Therefore, angel investors are the key players in generating high-growth companies, essential to regional economic development. As a result, they have attracted the attention of policy makers. Thus, this research attempted to improve the conception of decision-making criteria used by the BAs for investment, and reports the findings of an exploratory project that analysed the Malaysian BAs’ decision-making process. A hierarchy of multiple criteria decision making (MCDM) model based on fuzzy sets theory and VIKOR (in Serbian: Vise Kriterijumska Optimizacija I Kompromisno Resenje) method were proposed in order to look into the decision making process. For this reason, 5 main criteria and 29 sub criteria were developed to be evaluated by 5 well-known BAs to assess and rate the criteria and alternatives using fuzzy linguistic variables. For the purpose of illustration, an empirical case study was conducted on Malaysian BAs and the results are presented with numerical examples. The final finding of the research suggested that Johor is the most suitable city for investment. Kuala Lumpur, Penang, and Sabahare placed in the subsequent ranks. The proposed framework had been successfully applied for the decision making process, and could be used by other BAs for their cases with slight modifications.
Highlights
There has been an increasing number of examples around the world regarding programmes and policies to support angel investment, ranging from tax incentives to co-investment funds, to support national angel associations, groups, and networks
From a business angels (BAs)’s perspective, Mason and Rogers (1997) and Mason and Harrison (2002) suggested that most investors do have a set of clear defined investment criteria which influence the type of businesses that they consider investing in, though these criteria may be relaxed in certain circumstances, notably when the entrepreneur/management team has a high credibility
This paper reports the findings of an exploratory project that analysed the Malaysian BAs’ decision-making process investment criteria, as it was difficult to locate and conduct a survey on these BAs.To the best of our knowledge, this is the first empirical study that addressed the BAs’ decision making using the multiple criteria decision making (MCDM) approach
Summary
There has been an increasing number of examples around the world regarding programmes and policies to support angel investment, ranging from tax incentives to co-investment funds, to support national angel associations, groups, and networks. Despite the significant number of academic researches that have undertaken the field of BAs, little is known about the decision-making process of angel investors as the important contextual factor, and most of them have a tendency to maintain a low public profile. For this reason, the VIKOR method developed in fuzzy environment was used to evaluate and prioritize the most important investment criteria and to choose the city with the highest potential for investment. The results of the pilot study, conclusion, and suggestions for the future studies are clarified
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