Original scientific paper
https://doi.org/10.1080/1331677X.2022.2063920
Business angels and early stage decision making criteria: empirical evidence from an emerging market
Martina Skalicka
Marek Zinecker
Adam P. Balcerzak
Michał Bernard Pietrzak
Abstract
How do business angels assess a prospective entrepreneurial firm
when they make an investment decision? This article examines a
central question that informal venture capitalists have been struggling
with for decades: What early stage decision making criteria
do investors define and apply to reduce the volume of potential
deals to a more manageable size? Based on semi-structured interviews
with business angels in an emerging market, we show that
investors are focused on the industry structure and product features,
on the other side, our results also suggest a very strong
support for the personality of the entrepreneur and management
team. More specifically, entrepreneur trustworthiness is an essential
element affecting an investor’s decision to close a deal.
Business angels set requirements in terms of the entrepreneur’s
equity stake in the start-up and monitoring tools to prevent the
failure of investee firms. Our findings suggest that if there are
warning signs that the project is in an existential crisis, most of
the investors will reject their participation. We believe that our
empirical results support both researchers and practitioners to
establish a better understanding between the well-developed
financial theories and the underresearched informal venture capital
market in a Central and Eastern European country.
Keywords
Business angels; decision making; early stage; screening criteria; rejection criteria; survey; policy implications; emerging market
Hrčak ID:
303719
URI
Publication date:
31.3.2023.
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