Master-Arbeit Univ. St. Gallen, 2008.

Zugl.: Bamberg, Universiẗat, Diss., 2005.

Zugl.: Augsburg, Universiẗat, Diss., 2007.

Background:Business Angels (BA) and Angel Investment Organizations (AIO) have become an essential source of capital for entrepreneurs, whereas Business Angel Groups (BAG) are the most recent organizational form in which Business Angels organize themselves. However, BAG still face several issues that prevent them from success in the long term, such as identifying the right members and creating membership engagement. Consequently, why these forms still fail remains unknown. Although, research on how new organizational forms emerge has received considerable attention. There are missing explanations for why they fail. Moreover, the reasons why organizations build legitimacy has been thoroughly investigated. Nevertheless, legitimacy in the emergence of new organizational forms has been neglected. Purpose:This study explores the emergence of a new stable organizational form through the lens of legitimacy. The main goal is to understand how legitimacy judgments can influence the emergence of a new form and how an organization can affect this process. The purpose is to contribute to the literature about AIO, emerging new organizational forms, and legitimacy. Method:Based on a retroactive longitudinal qualitative single case study, the researchers used grounded theory to derive a new theory from data. The study follows the Gioia method, a systematic inductive approach to concept development. The primary data consisted of 18 semi-structured interviews with practitioners, case informants, and context informants, triangulated with secondary data from documents, articles, and websites. Conclusion:The findings indicate that unstable organizations face problems aligning legitimacy judgments. Consequently, if successfully aligned, a new stable organizational form emerges. First, our findings contribute to the literature on the emergence of new organizational forms by including legitimacy processes. Second, we contribute to the framework of legitimacy by highlighting the importance of micro-meso-macro interrelationships. Finally, the findings contribute to the BA literature by providing a new form of AIO, named Business Angel Fund (BAF), that enables legitimacy alignment and solves current issues.

Seed technology ventures require external sources of debt and equity funding, once they have exhausted founders personal resources, to achieve their potential economic impact. The primary source of equity finance for seed ventures is from Business Angels who invest their own money in the company and frequently provide additional sources of assistance to the entrepreneur. Once seed ventures have completed their business plans, however informally, they pitch their opportunity to potential investors, However, less than three per cent of these pitches to Business Angels are successful. It is suggested that a major reason for this low success rates is a lack of understanding by pitching entrepreneurs of how Business Angels make their investment decisions. Investigating how Business Angels make their investment decisions will identify some of the causes of this high failure rate. In turn this will help to suggest ways for entrepreneurs to increase their likelihood of successful interactions with investors. Real-time techniques that involve observing successive interactions between five Business Angels and 150 pitching entrepreneurs are used to gather data on the investment decision-making process. The technique of observational interaction has been used in psychological research to observe interpersonal relationships and their development within the context of a complex process. This complex process can best be understood by breaking down the process into stages. In this research the initial interaction between entrepreneur and Business Angel is investigated. It is found that initially the Business Angels use a filtering technique to expeditiously reject most opportunities. This allows, allow them to concentrate their limited resources on further investigation of a few promising opportunities that appear to offer the highest potential return. The unique data set used in this research is taken from a reality TV show – CBC Dragons’ Den – where entrepreneurs participate in order to receive real investment from five wealthy individuals known as “Dragons”. Using the video material gathered during the recording of the show it is possible to observe how the five Dragons initially filter out most opportunities, before looking at more positive factors when determining their interest in investing in the few opportunities remaining. This filtering process involves a non-compensatory technique - Elimination-By-Aspects, where the presence of a single one of eight potential fatal flaws is sufficient reason for rejection. While this may not be the most accurate technique, it is the most cost effective approach to decision-making for the investors. To increase accuracy at later stages, the investors adopt a more compensatory decision-making approaches. Improved understanding of the staged nature of the process, and how Business Angels identify fatal flaws at the initial stage of the interaction, provides valuable insights to both investors and entrepreneurs. Armed with this knowledge they can take steps to eliminate such flaws and improve the overall efficiency of the decision making process. This in turn will lead to an increase in successful outcomes of such interactions and consequently the number of seed ventures that are successful in raising third-party funding from Business Angels.

Seed technology ventures require external sources of debt and equity funding, once they have exhausted founders personal resources, to achieve their potential economic impact. The primary source of equity finance for seed ventures is from Business Angels who invest their own money in the company and frequently provide additional sources of assistance to the entrepreneur. Once seed ventures have completed their business plans, however informally, they pitch their opportunity to potential investors, However, less than three per cent of these pitches to Business Angels are successful. It is suggested that a major reason for this low success rates is a lack of understanding by pitching entrepreneurs of how Business Angels make their investment decisions. Investigating how Business Angels make their investment decisions will identify some of the causes of this high failure rate. In turn this will help to suggest ways for entrepreneurs to increase their likelihood of successful interactions with investors. Real-time techniques that involve observing successive interactions between five Business Angels and 150 pitching entrepreneurs are used to gather data on the investment decision-making process. The technique of observational interaction has been used in psychological research to observe interpersonal relationships and their development within the context of a complex process. This complex process can best be understood by breaking down the process into stages. In this research the initial interaction between entrepreneur and Business Angel is investigated. It is found that initially the Business Angels use a filtering technique to expeditiously reject most opportunities. This allows, allow them to concentrate their limited resources on further investigation of a few promising opportunities that appear to offer the highest potential return. The unique data set used in this research is taken from a reality TV show – CBC Dragons’ Den – where entrepreneurs participate in order to receive real investment from five wealthy individuals known as “Dragons”. Using the video material gathered during the recording of the show it is possible to observe how the five Dragons initially filter out most opportunities, before looking at more positive factors when determining their interest in investing in the few opportunities remaining. This filtering process involves a non-compensatory technique - Elimination-By-Aspects, where the presence of a single one of eight potential fatal flaws is sufficient reason for rejection. While this may not be the most accurate technique, it is the most cost effective approach to decision-making for the investors. To increase accuracy at later stages, the investors adopt a more compensatory decision-making approaches. Improved understanding of the staged nature of the process, and how Business Angels identify fatal flaws at the initial stage of the interaction, provides valuable insights to both investors and entrepreneurs. Armed with this knowledge they can take steps to eliminate such flaws and improve the overall efficiency of the decision making process. This in turn will lead to an increase in successful outcomes of such interactions and consequently the number of seed ventures that are successful in raising third-party funding from Business Angels.

<p>For entrepreneurs it can be difficult to attract investors. The business plan is a well-known document for that purpose, and is used widely by entrepreneurs and companies. With this in mind, several questions arise. What information in a business plan is important? Do the criteria for information in a business plan differ between banks, venture capital companies, and business angels? What is the perception of a business plan to these investors? These are questions future entrepreneurs have to deal with before taking action and start searching for investors. This thesis investigates the investors’ perspective on the issue of entrepreneurship and business planning.The purpose of this thesis is to broaden the understanding of the business plan as a mean to attract capital for new ventures. It further aims to investigate the relevance of the business plan and the optimal composition of information, according to the investors. A qualitative method has been used in this thesis. Empirical findings have been captured from interviews with relevant actors in the investing market, and thereafter been analyzed with existing theories. The overall conclusion in this thesis is that there is a very broad view of the business plan as a concept. There are different aspects of the business plans roles as a formal mean to attract capital. Obvious differences between how the three different investors evaluate a business plan have been found as well as that the investors find other things than the business plan to be important in a decision. The investors do not look solely on the business plan and then make the decision whether to invest or not. The third conclusion is that all three investors enter a company with different roles, affecting the business’ activities in different ways. Finally, the business plan as a document is never as formal as the theory states. It is surprisingly different from the theory which claims that formality is an important issue in this kind of documents.</p>

For entrepreneurs it can be difficult to attract investors. The business plan is a well-known document for that purpose, and is used widely by entrepreneurs and companies. With this in mind, several questions arise. What information in a business plan is important? Do the criteria for information in a business plan differ between banks, venture capital companies, and business angels? What is the perception of a business plan to these investors? These are questions future entrepreneurs have to deal with before taking action and start searching for investors. This thesis investigates the investors’ perspective on the issue of entrepreneurship and business planning.The purpose of this thesis is to broaden the understanding of the business plan as a mean to attract capital for new ventures. It further aims to investigate the relevance of the business plan and the optimal composition of information, according to the investors. A qualitative method has been used in this thesis. Empirical findings have been captured from interviews with relevant actors in the investing market, and thereafter been analyzed with existing theories. The overall conclusion in this thesis is that there is a very broad view of the business plan as a concept. There are different aspects of the business plans roles as a formal mean to attract capital. Obvious differences between how the three different investors evaluate a business plan have been found as well as that the investors find other things than the business plan to be important in a decision. The investors do not look solely on the business plan and then make the decision whether to invest or not. The third conclusion is that all three investors enter a company with different roles, affecting the business’ activities in different ways. Finally, the business plan as a document is never as formal as the theory states. It is surprisingly different from the theory which claims that formality is an important issue in this kind of documents.

This Ph.D. thesis examines characteristics of Business Angel investors in the Czech Republic and their attitudes to evaluation of investment projects. The research is based on primary data obtained by interviewing active Business Angel investors operating in the Czech Republic. The characteristics of Business Angel investors and their attitudes in investment decision making and subsequent monitoring of investments are analysed. Business Angel investors were also asked how they perceive external environment. The topics and questions listed in the interviews result from a systematic literature review. Based on the results of the interviews, an elimination model was developed to capture the preferences of individual Business Angel investors. The model represents a tool supporting entrepreneurs while determining the probability that their project will not be rejected without a deeper examination. Therefore, the model supports entrepreneurs to set the parameters of their projects to increase the likelihood that a Business Angel investor will undergo a detailed due diligence process.

Under de senaste decennierna har riskkapitalmarknaden utvecklats och har idag lagt grunden till bolag som Spotifys framgångssaga. Samtidigt som riskkapitalmarknaden har utvecklats den digitala utvecklingen i banksektorn riskerar att göra det svårare för nystartade bolag att finansiera sig via lån. Två aktörer på riskkapitalmarknaden som på senare tid har börjat likna varandra i sitt sätt att arbeta är affärsänglar och Venture Capital bolag. Tidigare har aktörerna inte samarbetat med varandra utan gått in i investeringar i olika skeden. Detta har föranlett en viss konkurrens mellan aktörerna, samtidigt som det finns ett beroendeskap mellan partnerna. Affärsänglar är beroende av VC-bolag för att göra exits, medan VC-bolag är beroende av affärsänglar för att ha ett bra deal flow. Samtidigt som affärsängel-investeringar förväntas dominera marknaden i framtiden. Detta leder oss till syftet av denna studie som är att analysera hur ett Venture Capital bolag kan inkludera ett affärsängelnätverk i sin affärsmodell. Studien har genomförts i samarbete med Sörmlandsfonden och utgått från tidigare forskning för att analysera ett nytt perspektiv på hur riskkapitalmarknadens aktörer kan arbeta. Genom kvalitativa semi-strukturerade intervjuer möjliggjordes en djupgående analys över affärsmodellen från investerarnas perspektiv. Respondenterna var Sörmlandsfondens vd och affärsänglar som medverkar i Sörmlandsfondens tillhörande affärsängelnätverk. Affärsänglarna hade olika erfarenheter av investeringar inom konstellationen. För att affärsänglar och Venture Capital ska vara villiga att investera tillsammans identifieras flera faktorer där kapital, anpassning och relationer står i centrum. Anpassning konstateras utifrån respondenternas svar vara den främst avgörande faktorn för att aktörerna ska vilja investera tillsammans. Om inte affärsänglarna anpassar sig efter Sörmlandsfondens krav och vice versa hade båda aktörerna troligtvis vänt sig till någon annan, och de hade inte varit möjligt att investera tillsammans. Samtidigt som förtroende till varandras kompetens och kunskap har framkommit vara en av de främsta anledningarna till att de fortfarande medverkar i konstellationen. / During the recent decades, the venture capital market has developed and have been essential for companies such as Spotify’s success. At the same time as the venture capital market has developed, restrictions have been added from the banking sector where the digitalization make it difficult to finance start-up companies through loan. Two parties in the venture capital market, business angels and venture capital firms, have begun to resemble each other in their way of working. The parties have not previously collaborated because they have invested in different stages. This has given rise to some competition between the parties, at the same time as there is a dependency between them. Business angels depend on Venture capital to make an exit, while Venture capital depend on Business angels to have a good deal flow. Also, there is an expectation that business angel will dominate the future venture capital market. This leads to the purpose of this study, which is to analyze how venture capital can include a Business Angel Network (BAN) in their business model. The study was carried out in collaboration with Sörmlandsfonden and was based on previous research to analyze a new alternative on how the venture capital markets parties can operate. Through qualitative semi-structured interviews an in-depth analysis of the business model from the investor’s perspective was possible. The respondents where Sörmlandsfonden’s CEO and business angels from Sörmlandsfonden’s BAN with different experience in operating within this constellation. For Business angels and Venture capital to be willing to invest together, several factors were identified, which can be explained within three areas: capital, adaption, and relationships. Adaption is stated, based on the respondents’ answers, to be the mainconclusive factor for the willingness to invest together. If the Business angels did not adapt to Sörmlandsfonden’s requirements and vice versa they would not be able to invest together, since both parties would probably turn to another organization structure. At the same time, trust in each other’s competence and knowledge has emerged as one of the main reasons to why they still participate in the constellation.