Angel Financing and the Performance of High‐Tech Start‐Ups. (10th May 2016)

• Record Type: Journal Article
• Authors: Croce, Annalisa; Guerini, Massimiliano; Ughetto, Elisa
• Is Part Of: Journal of small business management. Volume 56:Number 2(2018:Apr.)
• Page Start: 208
• Page End: 228
• Publication Date: 2016-05-10
• Subjects: Small business -- Management -- Periodicals; 658.022
• DOI: 10.1111/jsbm.12250
• Languages: English
• ISSNs: 0047-2778

Abstract

Abstract : In this paper, we investigate what drives the performance of high‐tech start‐ups receiving angel financing, while taking a closer look at the capabilities (i.e., experience) and investment behavior of business angels (BAs). We exploit a new data set (extracted from Crunchbase), which consists of 1, 933 high‐tech start‐ups that received at least one financing round from a BA. The results indicate that the experience of BAs in early stage investments is positively associated with additional receipt of follow‐on rounds of financing and sequential capital injections from venture capitalists (VCs). Later‐stage experience is positively associated with the start‐up's success (i.e., probability to be listed or acquired), but reduces the need for new VCs to invest in the start‐up. Furthermore, we find consistent evidence that start‐ups that combine BA and VC financing experience higher levels of funding amounts, additional VC financing, and an improved likelihood of success. Finally, we find that the co‐localization of BA investors and start‐ups in the same area facilitates the attraction of VC financing.