The performance of angel-backed companies

Bonini, Stefano; Capizzi, Vincenzo; Zocchi, Paola

doi:10.1016/j.jbankfin.2018.12.006

Cited by 29 publications

(11 citation statements)

References 106 publications

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“…Indeed, the BA certifies ex‐ante the value of the firm, while the BAs’ ex‐post monitoring capability mitigates the potential for entrepreneurs’ moral hazard risk (Van Osnabrugge and Robinson, 2000). Second, BAs’ active involvement in the management of the company, through mentoring and coaching, may help the firm achieve higher growth performance (Bonini, Capizzi and Zocchi, 2019; Collewaert and Manigart, 2016; Madill, Haines and Riding, 2005), which facilitates subsequent VC investment.…”

Section: Related Literaturementioning

confidence: 99%

“…Third, the wide range of business expertise found among group members—who have different industry backgrounds but are mostly entrepreneurs, business professionals and senior executives (Mason and Botelho, 2014)—means that BANs can better add value to their investments relative to solo BAs. Being part of the BAN provides BAs with a series of advantages, including the sharing of information, knowledge and resources among other BAN members (Bonini, Capizzi and Zocchi, 2019; Brush, Edelman and Manolova, 2012; Mason and Botelho, 2014). Further, less experienced BAs can meet more experienced ones, which gives them the possibility to enhance their human capital and ability to make efficient investment decisions (Shane, 2000).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…Bonini et al ., 2018; Ibrahim, 2008; Kaplan and Strömberg, 2004; Kelly and Hay, 2003; Lerner et al ., 2018), how they add value to companies in the post‐investment phase (e.g. Bonini, Capizzi and Zocchi, 2019; Croce et al ., 2021; Kerr, Lerner and Schoar, 2014; Levratto, Tessier and Fonrouge, 2018; Mason and Harrison, 1996) and how their investments perform (e.g. Capizzi, 2015; Carpentier and Suret, 2015b; Cumming and Zhang, 2016; Mason and Harrison, 2002).…”

Section: Introductionmentioning

confidence: 99%

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Do Business Angels’ Investments Make It Easier to Raise Follow‐on Venture Capital Financing? An Analysis of the Relevance of Business Angels’ Investment Practices

Capizzi

Croce

Tenca

2021

British J of Management

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In this paper, we shed light on interactions among the various investors operating within the entrepreneurial finance ecosystem. Specifically, we aim to investigate what business angel (BA) investment practices are correlated with follow-on venture capital (VC) financing, and uncover the strategies that determine a complementary-based or a substitutionbased relationship with VCs. We analysed a sample of 176 companies that received a BA investment during 2008-2016 and collected financial data over a 10-year period after the BA investment. The data examined indicate that BAs' selectivity, as measured by their rejection rate, and BAs' affiliation to an angel network, are positively related with the probability of raising follow-on VC financing. However, a high level of BAs' monitoring activity negatively influences the probability of obtaining VC funding. Interestingly, BA networks do affect this relationship. The positive impact of BAs' rejection rate is informative for VC decisions if the BA does not invest through a network. Conversely, a high level of monitoring may convey a negative signal for VC, particularly if the BA is affiliated to a network. These results extend our knowledge of the investment practices of BAs and their role in allowing angel-backed companies to raise follow-on VC financing.

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Section: Related Literaturementioning

confidence: 99%

Section: Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Do Business Angels’ Investments Make It Easier to Raise Follow‐on Venture Capital Financing? An Analysis of the Relevance of Business Angels’ Investment Practices

Capizzi

Croce

Tenca

2021

British J of Management

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“…Corporate capital and business angels invest together, while corporate angels are also able to co‐invest in crowdfunding and accelerators (Wright et al, 2015). Angel‐backed companies are better and more likely to survive when angels are investing in a union (rather than independently; Bammens & Collewaert, 2014; Bonini, Capizzi, & Zocci, 2019; Collewaert & Manigart, 2016). Venture capital research has identified an important role in matching entrepreneurs and investor firms (Cumming & Johan, 2013; Fu et al, 2019; Yung, 2009).…”

Section: Literature Reviewmentioning

confidence: 99%

Public–private entrepreneurial financing partnership model in Nigeria

Ochinanwata

Ezepue²,

Nwankwo

et al. 2021

Thunderbird Intl Bus Rev

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This article critically examines some of the financing sources available to small and medium‐sized enterprises (SMEs) and factors that influence investor's decisions. Based on a qualitative approach, this study draws on evidence from Nigerian digital firms, public, and private financers to explore suitable entrepreneurial financing model for SMEs. Thus, it extends the understanding of combinations of entrepreneurial finance and funding in the African context. The study offers fresh and rare illustrative insights on how public–private entrepreneurial finance partnership will provide affordable and adequate access to entrepreneurial finance. It further highlights the impact and relevance of different entrepreneurial financiers on SMEs development and growth. It recommends a collaborative partnership initiative that involves public and private financial consultants and business incubators working together to ensure that SMEs have access to appropriate finance for growth, development, and business sustainability.

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“…They find that extraversion makes syndication more possible while conscientiousness decreases the likelihood of syndication investments. Bonini et al (2019) study the performance of angel-backed companies and show that the performance and the probability of survival of those companies are positively influenced by the presence of angel syndicates and the hands-on involvement of BAs and negatively affected by the intensity of angel monitoring and the time structure of equity provision.…”

Section: Introductionmentioning

confidence: 99%

In search of angels: the first bucket of gold for entrepreneurs

Song

Jain

2021

SEF

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Purpose This paper aims to explore the allocation of the exit value of a start-up company in market equilibrium between an angel investor and an entrepreneur in the very early-stage financing market. Design/methodology/approach The theoretical model is established based on the two-sided random search theory and the model’s ability to match the empirical data is evaluated via simulation. Findings The model indicates that the allocation of the final investment outcome is not proportional to the initial investments by the angel investor and the entrepreneur. The simulation results show that the continued investment by the entrepreneur and the private benefit acquired by the angel investor have a more profoundly negative influence on the angel investor’s share of the exit value of the start-up company. Moreover, the market search structure represented by the matching probability of an angel investor to an entrepreneur has a more significant impact on the angel investor’s share than the other model parameters. Originality/value The importance of market search friction in the very early-stage financing market is emphasized. The concepts of continued investments and private benefits are introduced and quantified for the first time under the framework of angel investment. The impacts of such model parameters as the matching probability of an angel investor to an entrepreneur, the success rate of a start-up company, the bargaining power of an angel investor and the discount rate on the allocation of the exit value of the start-up company are investigated as well.

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The performance of angel-backed companies

Cited by 29 publications

References 106 publications

Do Business Angels’ Investments Make It Easier to Raise Follow‐on Venture Capital Financing? An Analysis of the Relevance of Business Angels’ Investment Practices

Do Business Angels’ Investments Make It Easier to Raise Follow‐on Venture Capital Financing? An Analysis of the Relevance of Business Angels’ Investment Practices

Public–private entrepreneurial financing partnership model in Nigeria

In search of angels: the first bucket of gold for entrepreneurs

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