Business Angels Research Articles

The Business Angel, Being Both Skilled and Decent

In this review, we explore the scientific landscape regarding Business Angels (BAs), a person who decides to offer their skills to improve the community where they live, distinguishing the different ways in which it is possible to contribute. This systematic review starts with a precise definition of what a BA is in terms of goals, strategies, and intervention area, which could be in social, environmental, technological, or educational areas, differentiating a BA from other kinds of stakeholders, revealing some precise influences due to different cultures or entrepreneurial ecosystems. We are talking about a person who is authoritative not only in terms of competence, knowledge, and skills but who is also noteworthy in terms of moral stature and accountability. We used three databases, SCOPUS, WOS, and EBSCO, using VosViewer to create cluster mapping to differentiate the various areas of research on this topic. We revealed three clusters, namely Business Angel, entrepreneurship, and venture capital, that clarify different facets of the construct. BA activities are very different from conventional strategies and protocols. BAs can operate in innovative areas, bring their own technologies to improve capabilities, handle projects related to sustainability and innovation, and even address social functions and social cohesion.

The Role of Business Angels in the Early-Stage Financing of Startups: A Systematic Literature Review

The Role of Business Angels in the Early-Stage Financing of Startups: A Systematic Literature Review

Social Impact Business Angels as New Impact Investors

Social Impact Business Angels as New Impact Investors

Social media platforms use in startups’ international marketing strategies: a multiple case study

PurposeThis paper aims to investigate how social media support startups in accessing international markets and interacting with foreign customers and stakeholders, focusing primarily on the social network LinkedIn.Design/methodology/approachGiven the explorative research aim, the paper adopts a multiple case study approach, analyzing seven Italian food tech startups. 15 semi-structured interviews were conducted, also involving startup accelerators and a business angel to deepen the knowledge on the investigated phenomenon. In addition, a content analysis of the LinkedIn pages of the seven selected startups was conducted using NVivo 14 software.FindingsThe results of this study show that social media support startups to (1) diffuse brand awareness in international markets, (2) position their offering abroad and (3) develop relationships with international stakeholders to penetrate the local business. Furthermore, the main challenges and difficulties related to the use of social media by startups for these purposes were identified.Practical implicationsThis study provides useful managerial implications to enable startups to strategically use social media to access international markets and connect with key foreign networks. Also from a policy perspective, incentives to support the expansion and consolidation of startups into international markets are crucial.Originality/valueAlthough a vast literature has dealt with internationalization strategies, this study clarifies the role of social media in changing these dynamics speeding up startups’ access to foreign markets and identifying key local stakeholders.

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.

Challenges of business angels: does career matter?

PurposeThe business angels market dramatically changed the modus operandi and nature of business angels’ activity, evolving from lone investors to angel groups managed professionally. This paper aims to analyze the impact of angel perceived career development on angel satisfaction and, consequently, on their intention to continue investing.Design/methodology/approachA model was tested through covariance-based structural equation modeling (SEM) using AMOS based on data collected from 336 business angels from seven European countries.FindingsThe results highlight that: the perception of personal development is a decisive factor in pursuing the career of business angel; personal development has a higher explanatory power in angel career development than fostering innovation; and the perception of career development has positive impacts on angels’ job satisfaction and reinvestment intention. The paper ends with implications and guidelines for angels, gatekeepers and entrepreneurs, which may increase satisfaction with the angel experience and contribute to enriching business angel work.Research limitations/implicationsCross-sectional self-reported data were used to analyze the results of this study.Originality/valueTo paper extends the body of knowledge of business angels’ perceived career development, with implications for business angels, which may increase satisfaction with angel experience and, therefore, contribute to enhancing business angels’ activity. Thus, this study provides a consistent reference for forthcoming studies regarding the career of business angels and their relationship with entrepreneurs.

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.

‘All for one and one for all?’ Business angel groups as collective action

Angel investing has been transformed over the past two decades into a collective endeavour as angels have increasingly organised themselves into professionally-managed angel groups. A key role of the manager, typically termed the gatekeeper, is to undertake the initial screening of investment opportunities that the group attracts. We examine this activity through the lens of collective action using principal-agent theory to understand whether the gatekeeper (agent) acts in the best interests of the members (principal). Our study examines the gatekeeper’s approach to initial screening. Two different data gathering techniques were used to collect evidence from 21 gatekeepers representing 19 angel groups. First, verbal protocol analysis, which involved gatekeepers ‘thinking out loud’ as they undertook the initial screening of a potential funding opportunity, indicated that the majority did consider the shared interests of the members of the group, although in many cases this comprised only a small proportion of their overall comments. This could indicate the potential for moral hazard; however, the interview questions demonstrate that the gatekeepers focus on actions which increase the benefits for members. This requires that gatekeepers have a strong social relationship with group members to match their investment preferences with the types of investment opportunities that they ‘screen in’.

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.

THE ROLE OF THE ACCOUNTING ASPECT OF INNOVATIVE ACTIVITIES OF REGIONAL ENTERPRISES IN ENSURING THEIR ECONOMIC SUSTAINABILITY

In a world of rapid and continuous change and constant competition, innovation is becoming an important element in the sustainable development of companies and regions. A key factor in the success of innovation processes is the accounting aspect, which involves the systematisation, analysis and documentation of innovative changes. The study of this topic is becoming increasingly relevant due to the need to identify and solve problems related to innovation accounting. It aims at combining two strategically important areas – innovative development of enterprises and modern approaches to accounting and financial management. Purpose of the article. The purpose of the publication is to identify the key aspects of the problems associated with accounting for innovation activities at enterprises, as well as to reflect the role of such accounting in ensuring their economic sustainability. Methodology. The methodological basis of the work was formed by general scientific and special research methods: comparison, analysis, generalisation, graphic and tabular. The information base is based on official statistics, company reports and accounts, Internet resources and publications, and the results of the authors' own research. Practical implications. The research examines the problems of accounting for innovation activities of enterprises and makes proposals for their solution. The Ukrainian legislation regulating accounting lacks a coherent methodology for accounting for innovation costs. In order to provide the necessary analytical information on the costs of innovation activity, it is recommended to use accounts of the eighth class, opening sub-accounts of the third, fourth and higher order. Value/originality. The sources of financing and peculiarities of accounting for innovation activities of enterprises are studied, the main of which are the state resources and resources of enterprises and other business entities. Among the non-traditional sources of financing are venture capital funds, business incubators, business angels and crowdfunding.

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.

TAX INCENTIVE SCHEMES AND BALANCED REGIONAL ECONOMIC GROWTH IN TURKEY

This study delves into the impact of investment incentives on regional development and economic growth in Turkey. It provides a comprehensive overview of the investment incentive system introduced in 2012, categorizing regions based on development levels and offering various incentives such as tax exemptions, reductions, and social security support. The research investigates the relationship between investment incentives, public expenditures, regional differences, and economic growth. Through a thorough examination, the study aims to understand how the current incentive system addresses regional disparities and promotes balanced economic growth. The literature review explores international perspectives, including China and Italy, providing insights into the effectiveness of tax incentives on R&D investment and macroeconomic performance. The study also analyzes the European Commission's report on tax incentives for venture capital and business angels. The results and discussion section outlines the investment incentive framework in Turkey, emphasizing regional, priority, large-scale, and strategic schemes. The research considers twelve investment categories, each supported by specific incentive measures. The conclusion emphasizes the importance of aligning incentives with regional needs, fostering equitable development, and promoting strategic sectors. It highlights the significance of quasi-tax supports, VAT exemptions, and interest subsidies in encouraging investments. The employment and income tax withholding supports, especially in the 6th region, are recognized for their contribution to reducing unemployment. The study concludes by underscoring the need for continuous evaluation and adaptation of incentive schemes to address evolving economic challenges.

The transaction cost implications from business angel ownership in the Caribbean

AbstractResearch question/issueThis is a study of the relationship between business angel retained ownership in investee firms across the Caribbean region and their informational asymmetry costs captured in bid‐ask spreads.Research findings/insightsWe find business angel ownership to be associated with a reduction in transaction costs or bid‐ask spreads. However, this is reversed leading to increasing transaction costs following moderation by whether the investee firm has a subsidiary located within an offshore jurisdiction and separately if the investee firm adopts higher levels of Anglo‐American shareholder value corporate governance.Theoretical/academic implicationsWe undertake a novel application of incomplete contracting theory in theorizing the influence of ownership of business angels on the transaction costs of their investee firms. We extend and contribute to theory development through consideration of the presence of investee firm's subsidiary located in offshore financial centers within the firm's corporate network and the degree to which it adopts Anglo‐American shareholder value corporate governance. In the former, we argue business angels are more prone to collaborate with firm insiders to the detriment of outside minority investors given the enhanced opacity and shift in incentives. In the latter, we argue the incongruity between business angels, insiders, and outside minority expectations regarding the adoption of shareholder value governance also leads to elevated transaction costs.Practitioner/policy implicationsBusiness angel finance is widely lauded as a potential source of development capital within regional and developing economies with the potential to rejuvenate otherwise moribund entrepreneurial ecosystems and business sectors. Our study yields important findings relevant for practitioners in formulating development policy nurturing the development of indigenous economies through enhanced business angel participation. It also considers the moderating influence of firm's adoption of Anglo‐American shareholder value corporate governance and whether the firm has a related party located in an offshore financial center, something of profound importance in regions comprising offshore financial centers.

What do we know about the choices of entrepreneurs before the equity crowdfunding campaign?

AbstractThis literature survey focuses on the pre-investment phase of equity crowdfunding, encompassing three key areas: (i) a comparative analysis of equity crowdfunding (ECF) in relation to traditional sources of entrepreneurial funding, such as venture capital and business angels; (ii) a discussion on why and when entrepreneurs prefer ECF; and (iii) an in-depth examination of the diverse models of ECF platforms. This paper is relevant for both practice and research. It can help entrepreneurs to identify under what circumstances ECF might be preferable to traditional sources of start-up funding and which platform model best suits their needs. It is also relevant for research because, besides providing an organized summary of the literature on this new way of financing start-ups, it also identifies some inconsistencies and gaps in the existing literature, providing some clues for further investigations.

Sustainable Entrepreneurship: Romanian Entrepreneurs’ Funding Sources in the Present-Day Context of Sustainability

This paper aims to provide an in-depth analysis of the knowledge of and access to funding sources in the context of sustainability. Additionally, it seeks to analyse the perspectives and intentions of entrepreneurs regarding the use of such sources in the future. For this purpose, quantitative research was conducted, and data were collected from a sample of 267 respondents, companies operating in the Central Region of Romania. The evidence indicates that reinvestment of profits is the most commonly used funding source, followed by bank loans and leasing. The least-used and least-known funding source are Business Angels. Among the conclusions of the study, the demonstration of the link between the level of use of the funding sources, which moderates the close relationship between sustainability and the financial performance of a company, is noteworthy. Ultimately, this research opens new ways for collaboration between the academic environment, government, and local authorities. The results can be beneficial for stakeholders at both the micro- and macroeconomic levels interested in the sustainable development of the SME sector.

Evaluation of early stage start-ups by business angels: Indian evidence

Evaluation of early stage start-ups by business angels: Indian evidence

ГРАНТИ ПРОГРАМИ SEEDS OF BRAVERY ДЛЯ ПІДТРИМКИ УКРАЇНСЬКИХ ТЕХНОЛОГІЧНИХ СТАРТАПІВ В УМОВАХ ВІЙНИ

The article examines the SEEDS OF BRAVERY Project, which is funded by the European Union through the European Innovation Council. It is emphasized that this is an initiative implemented to support Ukrainian technology startups and their integration with the EU; the main goal of the Project is to promote the development of diversity, increase the potential of deep technologies and stimulate hundreds of innovations based on Ukrainian technologies that are useful for end users in Europe, Ukraine and around the world. The possibilities of the Project for Ukrainian startups and existing large-scale companies of Ukraine that develop innovative services or products have been demonstrated, namely: to receive financial and non-financial assistance for the implementation of the project's innovative business and innovative initiative. Emphasis is placed on the fact that this is help for business startups and companies that wish to expand their operational activities in Ukraine, to achieve a positive development effect, including for the implementation of social projects. The main areas of support for the Project were demonstrated: "Business and innovative services", "Innovative entrepreneurship", "Deep Tech incubators", "Ukraine reconstruction", "Expansion and acceleration of Deep Tech". The study noted that until April 25, 2025, Ukrainian companies can apply for grant funding in the amount of up to 60,000 euros in total. Outlined main support of the UASEEDs Project as of March 2024: 1. Non-refundable grants (up to 60,000 euros); 2. Access to additional financing; 3. Women's entrepreneurship and leadership programs; 4. Support of applications of Ukrainian startups to EIC and other European funding competitions; 5. Market Discovery and Fast track programs, as well as regular DemoDays with international investors and business angels; 6. Creation and acceleration of Deep Tech business, entrepreneurial education for scientists and innovators; 7. Getting to know investors, accelerators, stakeholders of the innovation ecosystem. Summarized, as a result of the implementation of these projects, a significant impact of the startups' activities on the innovation ecosystem of Ukraine, as well as on various spheres for the recovery of Ukraine in war conditions, is expected.

A Trend Analysis of Business Funding Patterns and Sources Among Student Entrepreneurs at the Institute of Higher Learning Level : Implications for Entrepreneurship Education and Support Programs

Business funding plays a pivotal role in facilitating entrepreneurial ventures, enabling them to initiate or expand their businesses effectively. Diverse funding sources, such as personal savings, venture capital, business angels, business loans, and government assistance, have been recognized as crucial means of financial support. However, for student entrepreneurs currently pursuing higher education, the suitability of these funding options is subject to several complexities. The inexperience in commencing a business, the commitment to academic pursuits, and adherence to specific student policies and eligibility criteria necessitate a more tailored analysis. Therefore, this paper delves into a trend analysis of business funding exclusively among student entrepreneurs. Drawing on data sourced from the esteemed Malaysian Academy of SME & Entrepreneurship Development (MASMED), at Universiti Teknologi MARA (UiTM), Malaysia, this study investigates business funding sources, business funds secured, business categories, and the level of student involvement over multiple years. This empirical examination and subsequent discussion provide invaluable insights into discerning patterns and shifts in student entrepreneurial business funding strategies. By scrutinizing these trends, a prediction students' decisions to venture into entrepreneurship, particularly with regards to securing adequate business funding can be developed. Furthermore, this study's findings pave the way for more comprehensive investigations, guiding potential policy enforcements in both governmental and private sectors pertaining to business funding. Ultimately, the elucidation of these trends contributes to fostering an ecosystem conducive to the growth and sustenance of student-led enterprises, unlocking new avenues for economic and societal development.

How do investor characteristics of business angels and venture capitalists predict the occurrence of co-investments?

Business angels (BAs) and venture capitalists (VCs) play major roles in the early funding stages of a venture. Although a significant proportion of venture funding rounds results from multiple investor types, most existing research takes an isolated view of either BAs or VCs. Research on the conditions and reasons for the formation of co-investments by BAs and VCs remains scarce. This study closes this gap by considering the impact of investor characteristics of BAs and VCs on the likelihood of co-investment. We focus on investor reputation, prior investment ties, and geographic proximity between the new venture and the investor. We address the questions of how these investor characteristics predict the probability of a co-investment between BAs and VCs in the first funding round of a new venture. Relying on the resource-based view and agency theory, we examine conditions that are in place when the two types of investors co-invest. Using a large-scale dataset with more than 7300 funding rounds of US-based ventures between the years 2005 and 2017, we find support for our hypotheses that investor reputation, prior investment ties, and geographical proximity impact the likelihood of co-investment and that these associations differ depending on the investor type.

The Relationship Between Business Angels’ Psychological Attributes and Investments in Successful Portfolio Ventures: An Empirical Investigation Using Twitter Data

AbstractThe psychological attributes of business angels are an important but understudied determinant of business angels’ investment behaviour. We derive hypotheses on how psychological attributes (i.e. clout, risk‐taking, analytical thinking) affect business angels’ investments in successful portfolio ventures. Our theorized mechanisms draw on cognitive biases (i.e. overconfidence bias, loss‐aversion bias, confirmation bias) to explain how business angels’ psychological attributes could affect their selection of portfolio ventures. Empirically, we perform a language‐based text analysis using Twitter data to gain insights into the psychological attributes of 1511 US business angels who made 5209 investments. Our results show that the psychological attributes of clout, risk‐taking and analytical thinking can indeed affect business angels’ likelihood of investing in portfolio ventures that successfully acquire follow‐on funding, highlighting the importance of psychological attributes in business angel investments.