In many developed countries angel capital investment is the main source of external financing for high growth early-stage entrepreneurial companies. In spite of its importance, research in the angel capital market is still very limited. This is partly due the fact that data on angel capital investment is rare and unsystematic. This dissertation attempts to learn more about this important but not well-understood angel capital market. In particular, the first essay looks at the relationship between angels and venture capitalists in financing start-up ventures. This essay juxtaposes a complements hypothesis – angel financing is a springboard for venture capital, against a substitutes hypothesis – angels and venture capital are distinct financing methods that ought not to be combined. The result shows that companies that obtain angel financing subsequently obtain less venture capital, and vice versa. On average venture capitalist make larger investments, but this alone cannot explain the substitutes pattern. In addition, this essay reports that companies funded by venture capital perform better than angel backed companies, as measured by successful exits or revenues. Mixing angel and venture capital funding tends to be associated with worse performance. The second essay studies the role of geographic distance between the angel investors and the investee companies on the angel investment performance. This essay conjectures four possible channels that can explain the relationship between distance and the return to angel investment. It shows that distance has a positive relationship with the return to angel investment. Examining the effect of distance across different categories of angel investors, across angel investor’s locations, and across company’s location, this essay finds evidence that this positive relationship is mainly driven by the “objectivity effect”, which suggests that distant investors can evaluate the prospect of a company more objectively than close-by investors, who tend to be more biased in their judgments. The third essay examines why entrepreneurs find it generally hard to find angel investors. This essay modifies the standard search model introduced by Pissarides to explain this phenomenon. In this model, angels hide to force entrepreneurs to engage in a costly search. The result shows that angel investors adopt the hiding strategy to screen out low-productivity entrepreneurs who would otherwise inundate angels. Interestingly, social surplus is often increased when angels hide, though in some circumstances surplus may fall. / Graduate / 0505 / danvo@uvic.ca

Early-stage investors increasingly impact the surging video game industry. Thus, understanding their thought processes provides vital insight for entrepreneurs. This thesis explores how early-stage investors assess investment opportunities in the Swedish game industry by presenting semistructured interviews with three prominent angel investors. Thematic analysis was performed on the interview data to extract significant themes regarding investors’ thought processes. Themes were then contrasted with previous research on investor decision-making to establish emergent patterns in the game industry. Results indicate that investors regard the composition and reliability of the team and pursue long-term involvement in companies. It is particularly important for teams to inspire trust. If investors can connect to teams personally, it facilitates successful long-term collaboration. Future research should focus on interviewing investors in other flourishing game markets, such as the U.S. or Chinese. Congruent results may lay the foundation for a framework to aid developers with acquiring funds in the broader game industry.

No description available.

Thesis advisor: Thomas J. Chemmanur / My dissertation consists of three chapters. In the first chapter, I study the impact of a place-based tax credit policy, the Opportunity Zone program created under the Tax Cuts and Jobs Act of 2017, on local private investments and entrepreneurship. Using a difference-in-differences approach and comparing census tracts designated as Opportunity Zones and other eligible but non-designated tracts, I find that the policy has drawn significantly more private investments to economically distressed areas. Surprisingly, however, these private investments have led to decreases in local new business registration. The decrease in entrepreneurship was mainly in the non-tradable sector, which is more sensitive to local conditions than the tradable or construction sector. Further robustness tests suggest that the above results are causal. I provide one explanation for the above findings that more private investments went to existing and older firms in Opportunity Zones, discouraging potential entrepreneurs from competing with the better-financed firms locally. In the second chapter, I examine how changes in investor protection regulations affect local entrepreneurial activity, relying on the heterogeneous impact of a 2011 SEC regulation change on the definition of accredited investors across U.S. cities. Using a difference-in-differences approach, I show that cities more affected by the regulation change experienced a significantly larger decrease in local angel financing, entrepreneurial activity, innovation output, employment, and sales. I find that small business loans and second-lien mortgages became entrepreneurs’ partial substitutes for angel investment. My cost-benefit analysis suggests that the costs of protecting angel investors through the 2011 regulation change outweigh its benefits. In the third chapter, which is co-authored with Thomas Chemmanur and Harshit Rajaiya, we address three important research questions by using a large sample of angel and venture capital (VC) financing data from the Crunchbase and VentureXpert databases and private firm data from the NETS database. First, we analyze the relative extent of value addition by angels versus VCs to startup firms. We show that startups financed by angels rather than VCs are associated with a lower likelihood of successful exit (IPO or acquisition), lower sales and employment growth, lower quantity and quality of innovation, and lower net inflow of high-quality inventors. We disentangle selection and monitoring effects using instrumental variable (IV) and switching regression analyses and show that our baseline results are causal. Second, we investigate the complementarity versus substitution relationship between angel and VC financing. We find that a firm that received a larger fraction of VC or angel financing in the first financing round is likely to receive a larger fraction of the same type of financing in a subsequent round; however, when we include other non-VC financing sources such as accelerators and government grants into the analysis, a firm that received angel (rather than other non-VC) financing in the first round is also more likely to receive VC financing in a subsequent round. Third, we analyze how the financing sequence (order of investments by angels and VCs across rounds) of startup firms is related to their successful exit probability. We find that firms that received primarily VC financing in the first round and continued to receive VC financing in subsequent rounds (VC-VC) or those that received primarily angel financing in the first round and received VC financing in subsequent rounds (Angel-VC) have a higher chance of successful exit compared to those with other financing sequences (VC-Angel or Angel-Angel). / Thesis (PhD) — Boston College, 2022. / Submitted to: Boston College. Carroll School of Management. / Discipline: Finance.

Thesis (MComm (Business Management))--University of Stellenbosch, 2009. / ENGLISH ABSTRACT: For any country, including South Africa, new business development is critical for the sustained growth and development of the economy. In this study the impact of the transfer of knowledge and skills by the investor to the investee and the impact on the success of private equity, venture capital and angel investments, new business development in South Africa and internationally is researched. A literature study is firstly conducted to determine, from literature, the importance of the transfer of knowledge and skills by the investor to the investee of a new venture. The results from recent research conducted in the United States of America and Europe is also included to determine current global development tendencies. The research highlighted factors, other than merely having a good business idea, which determines the success of a new venture. The global research clearly demonstrates that the active involvement of the angel investors, venture capitalists and private equity investors in new ventures, through the transfer of knowledge and skills, determines the success of the investment in new business development. The survey that was done in the South African venture capital environment seems to support this outcome although the South African market sector is in the early stages of development and focuses mainly on private equity and not so much new business development. / AFRIKAANSE OPSOMMING: Nuwe besigheidsontwikkeling is krities vir enige land, ingeslote Suid Afrika, om deurlopende en volhoubare groei en ontwikkeling van die land se ekonomie te verseker. Hierdie studie het die impak van die oordrag van kennis en vaardighede op die sukses van privatekapitaal- , waagkapitaal- (alternatiewelik – nuwebesigheidsbeleggings) en engelbeleggings in nuwebesigheidsbeleggings vir Suid Afrika en Internationaal, nagevors. ‘n Literatuurstudie om die belangrikeid van die oordrag van kennis en vaardighede, van die belegger na die nuwe besighede, in die gemelde belggingsprosesse vir nuwebesigheidsbeleggings te bepaal, is eerstens gedoen. Die uitkoms van navorsings wat onlangs in die Verenigde State van Amerika en Europa gedoen is, is ook ingesluit om die huidige internationale ontwikkelingstendense rakende nuwebesigheidsbeleggings te bepaal. Die navorsing het die klem geplaas op ander belangrike faktore anders as slegs ’n goeie besigheidsidee, wat die sukses van ‘n nuwe besigheid bepaal. Die internasionale navorsing het duidelik aangedui dat die aktiewe betrokkenheid van beleggers, engel-, waagkapitaal en privatebeleggers, deur die oordrag van kennis en vaardigheid aan die nuwe besigheid, die sukses van die nuwe besigheid en dus die belegging bepaal. Die opname wat in Suid Afrika gedoen is, ondersteun hierdie internasionale bevinding alhoewel die Suid Afrikaanse nuwebesigheidsbeleggings sektor in die vroeë stadium van ontwikkeling is en daar hoofsaaklik gekonsentreer word op privatekapitaalbeleggings, “private equity investments”, terwyl die werklike nuwebesigheidsbeleggings nie soveel aandag geniet nie.

This bachelor thesis evaluates how high-engagement investors contribute to the development and growth of for-profit social enterprises by providing both funding and non-financial advisory services focused on organisational capacity-building. Case studies on three social enterprises describe the structure of funding deals, what considerations affected these due to the high social character of the ventures, and inquire into the relationship between social enterprise and their investors to evaluate how the investors provide value for their investees beyond capital. The investor types involved include commercial venture capital funds, angel investors, accelerator programs and venture philanthropy funds; a sort of social impact investment fund which combines the high- engagement mentoring of venture capital funds with lower expectations on financial returns in exchange for higher demands on social impact. The findings indicate that high-engagement investors in general provide a wide range of services to the social enterprises studied, where strategic advisory services and networks introductions are identified as key enablers for development. Aligning philosophies on the combination of business and social impact is also identified as critical for a constructive relationship between investor and investee. The perceived value of venture philanthropy funding diverges between the cases; while filling an empty space in the social enterprise capital market, some findings question their capabilities and investment model. Apart from the initial research questions on how high-engagement investors add value to social enterprises, the study raises further questions on social enterprise funding in general and the issues that obstructs these organisations from introducing innovation and growth to underdeveloped markets.

Bakgrund Entreprenörer som startar nya företag kommer troligtvis att behöva antingen kapital, eller kompetens i hur ett företag drivs, men mest sannolikt är att de behöver både och. Affärs-änglar är individer som investerar sina privata pengar mestadels i företag som befinner sig i en utvecklingsfas eller en tidig tillväxtfas. Affärsänglar kan också bidra med icke-finansiella resurser till företag såsom kompetens, färdigheter, kunskap och erfarenhet. Problem/Syfte Vad kan entreprenörer som är i behov av både kapital och kompetens göra för att hitta den ”rätta” affärsängeln, hur kan entreprenören attrahera denna, samt vilka faktorer är avgö-rande för att en arbetsrelation med en affärsängel ska bli lyckad? Syftet med denna uppsats är att utifrån entreprenören som investeringsobjekt så väl som kapitalsökare, beskriva olika faktorer som entreprenörer kan beakta för att öka sina möjligheter till att inleda och genomföra ett lyckat samarbete med en affärsängel. Slutsats Vi fann ett antal faktorer som kan påverka utgången av en arbetsrelation med en affärsäng-el. Dessa är den personliga relationen, att entreprenörens behov stämmer överens med vad affärsängeln kan erbjuda, överensstämmande avsikter, och ett väl genomarbetat aktieägar-avtal. / Background Entrepreneurs who start a new venture will probably need either capital, or competence in how to run a business, but most likely they need them both. Business angels are individuals who invest their private money in companies in a start-up or early growth phase. Business angels can also contribute non-financial resources to companies such as competence, skills, knowledge and experience. Problem/Purpose What can entrepreneurs who are in need of both capital and competence do to find the “right” business angel, how can they attract these investors, and which factors are decisive for a successful working relationship with a business angel? The purpose of this thesis is, with a starting point in the entrepreneur as an investment project and capital seeker, to de-scribe a number of factors entrepreneurs can consider in order to increase their possibilities in initiating and carrying out a successful working relationship with a business angel. Conclusion The authors found a number of factors affecting the outcome of a working relationship with a business angel. These are the personal relationship, a match between the entrepre-neur’s needs and the business angel’s competence, an agreed agenda, and a thoroughly worked out shareholder agreement.

<p>Bakgrund</p><p>Entreprenörer som startar nya företag kommer troligtvis att behöva antingen kapital, eller kompetens i hur ett företag drivs, men mest sannolikt är att de behöver både och. Affärs-änglar är individer som investerar sina privata pengar mestadels i företag som befinner sig i en utvecklingsfas eller en tidig tillväxtfas. Affärsänglar kan också bidra med icke-finansiella resurser till företag såsom kompetens, färdigheter, kunskap och erfarenhet.</p><p>Problem/Syfte</p><p>Vad kan entreprenörer som är i behov av både kapital och kompetens göra för att hitta den ”rätta” affärsängeln, hur kan entreprenören attrahera denna, samt vilka faktorer är avgö-rande för att en arbetsrelation med en affärsängel ska bli lyckad? Syftet med denna uppsats är att utifrån entreprenören som investeringsobjekt så väl som kapitalsökare, beskriva olika faktorer som entreprenörer kan beakta för att öka sina möjligheter till att inleda och genomföra ett lyckat samarbete med en affärsängel.</p><p>Slutsats</p><p>Vi fann ett antal faktorer som kan påverka utgången av en arbetsrelation med en affärsäng-el. Dessa är den personliga relationen, att entreprenörens behov stämmer överens med vad affärsängeln kan erbjuda, överensstämmande avsikter, och ett väl genomarbetat aktieägar-avtal.</p> / <p>Background</p><p>Entrepreneurs who start a new venture will probably need either capital, or competence in how to run a business, but most likely they need them both. Business angels are individuals who invest their private money in companies in a start-up or early growth phase. Business angels can also contribute non-financial resources to companies such as competence, skills, knowledge and experience.</p><p>Problem/Purpose</p><p>What can entrepreneurs who are in need of both capital and competence do to find the “right” business angel, how can they attract these investors, and which factors are decisive for a successful working relationship with a business angel? The purpose of this thesis is, with a starting point in the entrepreneur as an investment project and capital seeker, to de-scribe a number of factors entrepreneurs can consider in order to increase their possibilities in initiating and carrying out a successful working relationship with a business angel.</p><p>Conclusion</p><p>The authors found a number of factors affecting the outcome of a working relationship with a business angel. These are the personal relationship, a match between the entrepre-neur’s needs and the business angel’s competence, an agreed agenda, and a thoroughly worked out shareholder agreement.</p>

This thesis explores the rapidly growing phenomenon of equity crowdfunding from the perspective of professional investors. The aim was to contribute to the relatively thin aca-demic field of equity crowdfunding, shedding light on why it is yet to be recognized as an important instrument for raising capital and provide suggestions for improvement. The data was collected through semi-structured in-depth interviews with Angel Investors that through their experience could identify benefits and constraints with equity crowd-funding not obvious to the crowd. Benefits of using equity crowdfunding platforms were outweighed by the identified constraints such as corporate governance issues, uncertainties concerning laws and regulations, high risk, and lack of intellectual capital. This eventually led to suggestions for improvements that included channelling the crowd investments through a mutual fund, and allowing the crowd to co-invest with Angel Investors to get around the constraints. Conclusively, the Angel Investors were positive towards the underlying ideology of equity crowdfunding of helping more entrepreneurial ventures reaching their full potential by tapping a previously unutilized source of capital, the crowd. However, there is scepticism to how the phenomenon is currently working in practice.

[pt] A economia mundial tem sofrido intensas mudanças nas últimas décadas. As pequenas e médias empresas ganham destaque na economia e revelam consigo a importância do mercado de capital de risco, que ajuda no desenvolvimento dessas empresas com auxílio financeiro e de conhecimento. Nas fases ainda mais iniciais destacam-se os investidores anjos, pessoas físicas com elevado capital social e financeiro que atuam de forma societária nessas empresas. Este trabalho descreve o advento da Economia Empreendedora, melhor adaptada às mudanças acima, e entra no universo do investidor anjo. Com base numa ampla revisão bibliográfica são descritos o investidor, seu ambiente e sua forma de atuação. Em seguida, pela aplicação de um questionário baseado no conhecimento obtido com a literatura, diversas barreiras nessa identificadas foram submetidas a uma pesquisa que constatou algumas semelhanças com os mercados internacionais e também peculiaridades do mercado brasileiro. Avaliou-se ainda o comportamento dos anjos frente a 17 variáveis políticas e econômicas. Esta parte da pesquisa é útil em especial para a avaliação das atuais políticas de incentivo a esta atividade e ao planejamento de outras. / [en] The World´s economy has changed a lot in the last decades. The small and medium size companies became more important and with them the venture capital, supplier of money and knowledge for these companies, also play an important role. In the first stages the angel investors, providers of social and financial capital for these companies, are more relevant. This work describes the origin of the Entrepreneurial Economy and enters into these investors universe. Based on an extensive bibliographic research it describes the angel investor, its environment and investment process. Latter, with research among Brazilian investors, the barriers fo und on the literature were submitted for their opinions. Many differences and similarities were found between Brazilian and the other markets. There were also evaluated the impact of 17 economic end political conditions, which are considerably important for the evaluation of actual and future political incentives to stimulate entrepreneurship.