Seeding new ventures - green thumbs and fertile fields: individual and environmental drivers of informal investment

László Szerb, Siri Terjesen and Gabor Rappai ()
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Gabor Rappai: University of Pécs, Hungary

No 2007-030, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: This study explores individual and country-level environmental drivers of informal "seed" investment. We examine four types of informal investors based on business ownership experience (or no such experience) and close family relationship with investee (or no such relationship): "classic love money", "outsider", "kin owner" and "classic business angel" investors. At the environmental level, we are interested in the role of economic development, income tax policies, start-up costs, pro-enterrise government programmes, availability of debt financing, entrepreneurship education and culture. Using Global Entrepreneurship Monitor data from telephone interiews with 257,793 individuals in 31 countries, including 5,960 informal investors, we report drivers for the four types of seed investment. Descriptive statistics are consistent with prior research: informal investors are likely to be older males who work full-time, earn high incomes, perceive start-up opportunities in the environment, and believe that they have the skills to start their own businesses. At the environmental level, we find that countries with higher percentages of informal investors are significantly likely to have higher levels of economic development, higher business start-up costs, higher levels of entrepreneurship education, lower income taxes and lower power distance. Other environmental effects on the four populations of informal investors are reported and discussed, as well as implications for practice, policy and future research.

Keywords: informal investment; individual drivers; environmental drivers; entrepreneurial careers; business ownership; new venture financing (search for similar items in EconPapers)
JEL-codes: E22 L26 M13 N2 (search for similar items in EconPapers)
Date: 2007-07-02
New Economics Papers: this item is included in nep-ent and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Journal Article: Seeding new ventures -- green thumbs and fertile fields: Individual and environmental drivers of informal investment (2007)
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