Angel Investors Research Articles

Emotions and entrepreneurial finance: Analysis of venture capitalists’ and business angels’ digital footprints on Twitter

Emotions are a central concept in previous entrepreneurship research, but this is mainly related to entrepreneurs and their entrepreneurial journey. However, venture capitalists (VCs) and business angels (BAs), two critical investors in the entrepreneurial finance literature, are essential actors in the entrepreneurial process. Still, little is known about investor emotions in this context. Therefore, in this study, we ask how venture capitalists differ from business angels in terms of their expressed emotions. To this end, we use an increasingly familiar research approach by examining the digital footprints of these investors on Twitter. For this purpose, we identify 822 investors from Crunchbase and analyze their 994,969 Tweets with Linguistic Inquiry and Word Count (LIWC) as a text analysis tool. Our results show that venture capitalists display more positive emotions on Twitter than angel investors, meaning that we find an association between VCs and emotional tone. Furthermore, in our post-hoc analysis, we explore further explanations for the differences between VC and BA. In doing so, we show differences in their expressed cognitive processes as well as in their communicated drivers. In both concepts, we find positive associations with the investor type of VC. To conclude this paper, we develop implications for practice and further research based on the results.

Distinctiveness from whom? Evaluation of startups' distinctiveness from multiple referents in angel investment platforms

AbstractResearch SummaryOptimal distinctiveness can enhance firm performance, but we know little about how startups can achieve optimal distinctiveness when faced with multiple referents. This study investigates the strategic positioning of startups relative to two interdependent referents—incumbents and peer startups. Analyzing data for 3266 business plans from an angel investment platform in China, we find that a startup's distinctiveness from incumbents positively influences angel investors' evaluations. However, the positive effect is weakened by the startup's distinctiveness from peer startups within the same platform category. Economic signals emitted by the startup can mitigate the negative interaction between distinctiveness from both referents. Our findings suggest that startups can use a nuanced approach to attain optimal distinctiveness by aligning with peers while differentiating themselves from incumbent firms.Managerial SummaryHow can startups use their business plans to differentiate themselves from competitors and attract angel investors? Using data from business plans submitted to an angel investment platform in China, we find that a startup's distinctiveness from incumbent competitors helps attract angel investors, but this advantage diminishes when its distinctiveness from peer startups is also high. Nevertheless, startups can alleviate the negative interaction by presenting economic signals, such as financial records. Overall, our study suggests that startups can achieve optimal distinctiveness by aligning with peers while distinguishing themselves from incumbents, with economic signals acting as a legitimacy buffer to enhance their acceptance by investors.

Pitch envisaging: The role of narrative transportation in pitching success

How are entrepreneurs able to optimize their ability to persuade angel investors to commit resources? Narrative transportation theory suggests that familiar elements of a story can change an audience's perceptions of, and attitudes about, the opportunity by influencing their cognition. When experiencing the effects of narrative transportation, individuals are “transported” into the story and begin to accept the narrative world as created by the story in lieu of personal knowledge, experiences, or real-world facts. In an entrepreneurship context, we posit that if investors are narratively transported through a familiar pitch narrative, they may envisage a favorable outcome of what is pitched and adapt the opportunity in their minds with the result of, ultimately, committing resources. The findings from our study of investors who watched and reported on multiple pitches suggest that cognitive processes induced by narrative transportation explain the relationship between familiarity and entrepreneurial opportunity adaptation, which—in turn—increase the likelihood of angels' resource commitment. The key insight of our study reveals that when the investors are mentally transported into the story contained within a pitch narrative, they will be more likely to adapt the opportunity and more likely to commit their resources.

Child leader standing on a precipice: a case study of NextGenInnov8

Learning outcomes After completion of the case study, students will be able to identify the traits required in child leadership and the ability to apply “The Whole Leadership Framework” child leadership model today, identify and discover opportunities to promote child leadership and analyse its sustainable impact and analyse how innovation clubbed with sustainability will create a competitive advantage with special reference to the innovative ultraviolet-C light sterilisation Suraksha Box. Case overview/synopsis Aditya Pachpande was a child prodigy of India, who had stunned the world with his trailblazing attitude ever since the tender age of 12. Aditya’s father, Sandeep Pachpande, a Harvard alumnus, wondered – “My son is ahead of his time. Would institutions ever acknowledge my innovative boy as a child leader? Will my child become a teen chief executive officer (CEO)? Will he ever get accepted?” Aditya leads by example as a student, changemaker, edupreneur, innovator and keynote speaker. He thinks, “Age is just a number”, but has had to shout out loud to be heard. With the nickname “Lecture man” given by his teachers and peers, he went on to contribute in endorsing skill-based experiential and discovery-based teaching-learning that addresses real-world issues and sustainable development goals. A CEO at the age of 11 years, he co-founded NextGenInnov8 Global Solutions Private Limited and NextGenInnov8 Social Foundation. Although achieving these milestones, he had to manoeuvre through several curve balls hurled at him by the system. Not the one to ever compromise on ethics, values and purpose, today he was at the crossroads – whether he should choose social change over-commercialisation of his business, simplicity and minimalism over product perfection, crowdfunding over loans or angel investors, manufacture in China or make in India just to name a few. The unstoppable Aditya, aspiring for acceptance, dreamt that someday, these policymakers and businesses would acknowledge child innovators and not write them off just because they were adolescents. Aditya, standing on a precipice, dreamt along. Complexity academic level This case has been particularly focused on postgraduate-early stage-level students pursuing business or entrepreneurial education-related programs. Supplementary materials Teaching notes are available for educators only. Subject code CSS 3: Entrepreneurship.

Investing in people, not in products: how age, gender, ethnicity, and attractiveness of entrepreneurial teams influence the decision-making of angel investors in Germany

AbstractThe high-risk decision environment and information asymmetries associated with investing in early-stage startups in pitch competitions make angel investors prone to biased decision-making. Drawing from social perception theory, this study examines how angel investors’ decisions are influenced by observed personal characteristics of entrepreneurial teams, based on representative stereotypes. Analyzing a dataset of N = 553 startup pitches from the German televised competition Die Höhle der Löwen, this study reveals that the likelihood of securing deals with German angel investors and the resulting business valuations are linked to certain superficial team characteristics. Specifically, the age, diverse ethnicity, and physical attractiveness of the entrepreneurial team have a significant positive effect on deal probabilities. Moreover, angel investors offer lower deal valuations to teams of older and female entrepreneurs, suggesting the presence of a systematic bias. These insights contribute to understanding the role of stereotypes in entrepreneurial finance and address the challenges related to bias in access to capital for early-stage startups in Germany.

Business and Financing Strategic in Entering a Biomass New Business (Case Study: PT ABC, in West Java)

Biomass is a renewable alternative fuel source that is more environmentally friendly than other fuels. Currently PT ABC has a biomass plant that produces wood chips and wood pellets in the West Java region. The purpose of this study is to analyse the business strategy and funding needed by PT ABC to enter the biomass industry in West Java. The research method used is a combination of descriptive and case study methods, with data collection through interviews, document analysis, and direct observation. SWOT, PESTEL, and Porter’s Five Forces analyses were conducted to evaluate the company’s internal and external situation. Furthermore, this research designs the right funding strategy based on 5 funding alternatives sourced from venture capital, Angel Investors, Banks, IPOs and Bonds. Based on the comparison results, alternative 3 (Bank Loan) is more profitable. This alternative provides NPV of Rp 8,503,386,171.21, Internal Rate of Return (IRR) of 31%, Payback Period (PP) for 4 years. This alternative will increase the value of the company in several ways such as diversification of financial risks, tax benefits on interest payments, guaranteed retained earnings, quick disbursement of funds, and maintaining the balance of shareholders’ equity. The findings of this study highlight the huge potential of the biomass market in West Java and Indonesia, and the importance of an appropriate funding strategy. This research provides valuable insights for companies looking to enter the biomass industry.

Private Capital Markets Insights 2024: The Return of Warrants to Mezzanine Debt

Despite the prevailing focus on the public markets, private companies represent approximately half of the world economy, if not more. This is a descriptive article presenting a summary of data and results from the 2024 Private Capital Markets Report, which is the product of the annual private capital markets survey. The annual survey was launched in 2009 and examines the behavior and trends of senior lenders, asset-based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately-held businesses, investment bankers, business brokers, limited partners, and business appraisers. Most of the survey panelists are based in the United States of America, but this is not a requirement. The data set also includes many panelists outside of the U.S. There was a total of 1,143 respondents represented in the 2024 survey. An empirical result of this article is that we test the theory that the recent return of warrants to mezzanine deals is associated with a higher interest rate environment. We find evidence supporting that association. These results may be helpful for academics and practitioners forecasting mezzanine activity and deal terms.

Challenges faced by the pre start ups in hilly areas of Uttarkhand

Abstract Start-ups is not the new terminology used now a days in India as there are tremendous number of start-ups are blooming in each and every small corners of villages and towns of India and Uttarkahand. The small Hilly state is also not far behind its performance in the star-up enterprises. Start ups means the new business started with some new ideas which are innovative and full of creativity. The start ups are those business units which are initially started with the financial help of their family, friends, relatives, acquaintances and through the government financial schemes mainly formulated for assisting the start up business units. Later on these start ups can grow their business with the financial help taken from the angel investors and from any other sources of finance. There are mainly three stages have been found for the business entrepreneurs such as existence, survival and success. This first stage is called the pre start up and second and third as start up. This paper states the present status and the problems faced by the pre start-ups of Uttarakhand to mobile towards start up and scale up their enterprises This paper also explain the suggestive measures to reduce these hindrances in order to enhance their scale of production and sale. Key Words: start up, scalable business, pre start up, challenges etc.

Intra- and interregional flows of business angel investment: mapping the winners and losers across UK regions and core urban economies

ABSTRACT Hitherto, the literature has largely overlooked the important role business angel finance plays in shaping different regional economies. Using a novel UK dataset, this paper calculates interregional inflows and outflows of business angel investment to identify the net winners and losers in terms of both the number of deals and the cash value of investment flows. We establish that only three regions were net beneficiaries while the other 11 UK regions and cities examined were net losers. The reduction in ‘home bias’ in angel investments may undermine the efficacy of policies aimed at stimulating localised investment and calls for greater demand stimulation policies to help alleviate the problem of ‘thin’ regional markets.

A Critical Study of Startup Financing Dynamics and Emerging Approach to Attracting Capital Resources

This study delves into the diverse landscape of startup financing in India, examining the sources of funds and emerging approaches to attracting capital resources. Through an analysis of general statistics, including the types of startups, gender distribution of founders, and funding sources, the study provides insights into the dynamics of the startup ecosystem. The findings reveal that a significant portion of startups rely on internal sources such as family and friends, personal savings, and bootstrapping, while external sources like angel investors, venture capitalists, and government grants also play a crucial role. Additionally, the study explores various financing options available to startups at different stages of their lifecycle, including debt financing, commercial lenders, government programs, and leasing arrangements. By shedding light on these financing avenues, the study aims to inform entrepreneurs, investors, and policymakers about the evolving landscape of startup finance and facilitate informed decision-making.

Entrepreneurial Incentives Among University Students in Georgia and Portugal

Abstract The study of entrepreneurial incentives among students is a highly relevant issue because it is of utmost importance for the economic development of the country to cultivate generations of entrepreneurs who will create high-value technological startups and contribute to the transformation of Georgia into a technological hub, a goal that we have been calling a priority for years. In recent years, there has been a tendency among young adults to show entrepreneurial initiative, although this is modest compared to what could truly change the image of the country. Funds and angel investors have emerged in the country, ready to invest in interesting business projects with global potential. In this process, the role of universities could be invaluable. The primary obstacle that Georgia’s and Portugal’s education systems are still facing is incorporating entrepreneurial skills into formal and vocational education. Scant is the rundown of colleges that have coordinated this new test in their educational programs. The region is characterized by precarious and unsystematic skill-based professional schooling, reflecting inadequate funding initiatives lacking sustainability. The article studies the factors influencing students’ entrepreneurial incentives in Georgia and Portugal, identifies the interests and opportunities of Georgian and Portuguese university students in starting a business, and discusses the best foreign practices for encouraging students’ entrepreneurial activity. The article reports a study, based on a survey, which identified the main facilitating and hindering factors that influence students’ entrepreneurial incentives. The paper also analyzes the environment supporting students’ entrepreneurial activities in Georgia and Portugal, discusses the possibilities of finding financing, and identifies the main obstacles that students face when starting a business.

Gender Gap in Business Angel Financing

Abstract This study explores the impact of gender on entrepreneurial finance, analyzing both the supply and demand sides of early-stage equity financing through Business Angel (BA) investments. The research investigates the probability of men and women-owned businesses securing BA investments and assesses whether the gender of BA investors influences financial transaction magnitudes, potentially disadvantaging women-owned businesses. Additionally, the study explores the intersection between the gender of BA investors and investees to test for the presence of any potential heterogenous behaviors in terms of average invested amounts by men (women) Business Angels towards women-(men-) owned target companies. Results reveal that women entrepreneurs receive less equity financing than men, with a lower probability of securing larger investments from men BAs. Notably, this bias is absent when women BAs invest in men-owned businesses. These patterns persist regardless of information availability and consideration of unobservable factors, suggesting a connection between this disadvantage and taste-based prejudice among men BAs.

Agency Costs of Outside Equity: Evidence From Start-Up Firms in Their First Two Years

This paper investigates the agency costs associated with outside equity infusions into 4928 randomly selected firms surveyed annually during their first two years of business. Sources of outside equity include angel investors, venture capital or private equity, other companies, or government sources. Changes in outside equity levels are significantly and positively associated with changes in the number of perquisite programs available to employees. These results are robust to controls for observable firm characteristics such as firm size and profitability.

Startups and Angel Investors

The general objective of the research was to determine the advances related to the startups and angel investors. The specific objectives of the research are to identify the most successful angel investors and the countries where angel investors invest the most. Methodology, in this research, 41 documents have been selected, carried out in the period 2018 – 2024; including: scientific articles, review articles and information from websites of recognized organizations. Results, startups have a significant impact on the economy of countries, and go hand in hand with innovation and receiving timely investment. Unicorns achieve global recognition. The largest global markets for venture funding are The United States, China and United Kingdom. Conclusions, angel investors play an important role in financing startups, so it is necessary that they have support from government institutions. The top angel investors in the U.S are Peter Thiel, Ron Conway and Naval Ravikant. The top angel investors in Europe are: Avi Eyal, Danny Rimer and Philippe Botteri. The top angel investors in China are: Neil Shen (Sequoia China / ByteDance / Hong Kong, China), Richard Liu (5Y Capital / Xiaomi / Hong Kong, China) and Zhen Zhang (Gaorong Capital / Pinduoduo / Beijing, China) (Forbes, 2023). Here are 3 angel investors in Africa that should be on your radar: Jérémy Goillot, Réna Kakon and Axel Peyrere. The top angel investors in Australia are: Tracie Clark, Lisa Siganto and Richard Moore. The largest global markets for venture funding are The United States, China and United Kingdom. United Kingdom, Germany and France are the countries in Europe where business angel investments the most.

Does risk aversion affect individuals’ interests and actions in angel investing? Empirical evidence from Japan

This study explores individuals’ interests and actions in angel investing. Using a sample of Japanese individuals who are interested and engage in general investing obtained from original survey data, we examine whether risk aversion and subjective time discounting are associated with angel investing. To provide a clear picture of potential and actual angel investors, we classify individuals’ attitudes toward angel investing into “no interest,” “interest only,” and “action.” By estimating the marginal effects of risk aversion on angel investment, we find that individuals’ risk aversion is negatively associated with their angel investment actions; that is, individuals with a higher degree of risk aversion are less likely to engage in angel investing. We also find that wealthy individuals are more likely to engage in angel investing. Moreover, among individuals with entrepreneurial experience, subjective time discounting is positively associated with their angel investment actions, suggesting that entrepreneurs with higher subjective time discounting are more likely to engage in angel investing.

164 Characterization of Market Movements and Private Equity in Neurosurgery Practices and Hospitals

INTRODUCTION: Surgical services could be faced with shifts in corporate management, restructuring, and incentives as trends such as private equity (PE) investment in healthcare continue to evolve. The number of surgical services acquired by PE firms has increased significantly over the last 20 years. Due to financial vulnerability and movement towards digital health, PE activity within healthcare has further grownsince the COVID pandemic. METHODS: PitchBook and Mergermarket were used to query deals involving neurosurgical practice within the United States at any time. Exclusion criteria consisted of non-neurosurgery practices and debt restructuring deals without a change in ownership. The company name, deal type, financing year, and state were extracted for each deal. Deal type was stratified by the following categories: angel investment, mergers and acquisitions, private equity and venture capital (PE/VC), and corporate buyout. Internal debt refinancing such as leveraged recapitalization was excluded from the analysis. RESULTS: A total of 125 companies were discovered in the initial search. After further review, 63 companies were included in final analysis. The deals occurred between 1994 to 2022 and involved companies in 27 different states. Of the 63 companies, 36 (57.1%) involved mergers or acquisitions, 16 (25.4%) involved private equity or venture capital firms, 7 (11.1%) involved corporate buyouts, and 4 (6.3%) involved angel investments. CONCLUSIONS: PE is increasingly involved with neurosurgery practices, with an associated decline in mergers and acquisitions. Future qualitative investigation is required to help characterize physician attitudes of PE-run practices in comparison to non-PE practices.

A guide to becoming green: Insights from angel investors developing sustainability-specific knowledge

ABSTRACT This paper explores how business angels develop the knowledge necessary to offer sustainability-value-adding activities, thereby becoming green angels. A multiple case study was conducted based on five investors from Germany and Sweden who offer sustainability-value-adding activities without having had explicit previous sustainability experience. Bringing together the empirical findings and literature on angel learning and sustainability competences, the introduced model illustrates that angels continuously apply a combination of hybrid strategies. The result of these learning strategies is sustainability-specific knowledge in a complex entrepreneurial context, including conceptual and systemic sustainability knowledge, critical thinking, ethical considerations, and capabilities for change. This study adds to the business angel literature as it empirically demonstrates how business angels go beyond the experiential, informal, and individual learning centered by existing literature and include a combination of vicarious, collective, and formal strategies.

Beyond Bootstrapping a Comprehensive Analysis of Entrepreneurial Finance Strategies in the Contemporary Business Landscape

The intricate landscape of entrepreneurial finance, extending its focus beyond traditional bootstrapping methods. In an era characterized by diverse funding options, this study conducts a comprehensive analysis of the myriad strategies employed by entrepreneurs to finance their business ideas. The investigation encompasses an examination of established methods such as angel investment, venture capital, crowd funding, and traditional bank loans, as well as emerging trends in decentralized finance (DeFi) and other innovative financial models. The research adopts a multifaceted approach, considering regional variations, regulatory influences, and cultural dynamics shaping entrepreneurs' financing choices. Through extensive data collection and analysis, the study aims to discern the nuanced factors influencing the selection of specific financing avenues by entrepreneurs operating in various sectors and geographical locations. Furthermore, the research assesses the long-term implications of different financing strategies on business performance, sustainability, and growth. By exploring success factors in crowd funding campaigns, the study contributes valuable insights into the dynamics of contemporary entrepreneurial finance, shedding light on the role of marketing, pitch quality, and social engagement in funding success. In addition to quantitative analysis, the research delves into qualitative aspects, investigating psychological factors that play a role in entrepreneurial decision-making. The study aims to uncover the intricate interplay of risk tolerance, overconfidence, and decision biases in the financing choices made by entrepreneurs. As technological innovation continues to reshape the entrepreneurial landscape, this research explores the impact of emerging technologies, including blockchain and decentralized finance, on funding models. By examining the opportunities and challenges presented by these innovations, the study provides a forward-looking perspective on the evolving nature of entrepreneurial finance. "Beyond Bootstrapping" strives to offer a holistic understanding of entrepreneurial finance in the contemporary business environment, providing stakeholders, policymakers, and entrepreneurs themselves with valuable insights into the diverse strategies shaping the financial foundation of innovative ventures.

Art Collectors as Angel Investors: A Brazilian Collection

The literature on measuring returns on art investments typically aims to understand the characteristics of art as an investment class and whether investing in art can yield good returns for an investor and their portfolio. This literature places less emphasis on how the risk taken in the creation of art is assumed and borne by the agents who compose this market. Inspired by the publication “Art Collectors as Angel Investors” (2023) by Whitaker and Kräussl, this study examines a real collection of a Brazilian collector to verify whether the investment strategy employed in the purchase and sale of the works in the collection aligns with the definition of an angel investor presented in the reference article.

The Impact of Equity Financing on Financial Performance: Evidence from Jordan

Abstract The main objective of this study is to examine the impact of equity financing on the financial performance of Jordanian industrial companies. The study population comprised 393 board directors from 55 Jordanian industrial companies. Purposive sampling was employed to select 346 board directors for the study sample. Data were collected via an online questionnaire, and the study used a descriptive-analytical approach to examine the study hypotheses. The study concludes that equity financing posi-tively impacts financial performance. Also, each of the angel investors, retained earnings, crowdfunding, and ploughed-back profit positively impact financial performance. The study recommends that Jordanian industrial companies focus on retained earnings as a funding source; what helps is the lower costs of obtaining financing from retained earnings compared with other funding sources. This study is unique because, as far as the researcher knows, it is the first to look at how angel investors, retained earnings, crowdfunding, and ploughed-back profit affect the financial performance of Jordanian industrial compa-nies all at the same time or separately.