The angels’ share hypothesis in new firms

Ikenna Uzuegbunam (), Brandon Ofem (), Joe Fox () and Satish Nambisan ()
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Ikenna Uzuegbunam: Howard University
Brandon Ofem: University of Missouri-St. Louis
Joe Fox: University of Akron
Satish Nambisan: Case Western Reserve University

Small Business Economics, 2023, vol. 61, issue 2, No 18, 843-865

Abstract: Abstract We investigate the impact of the angels’ share—the angel investors’ proportion of ownership—on entrepreneurial performance. We argue that below the blockholder level of ownership, the angels’ share is associated with greater innovation but lower market performance. In contrast, we predict that above the blockholder level of ownership, the angels’ share is associated with lower innovation but higher market performance. We test this proposition across two independent samples of US-based ventures. In study 1, we analyzed data from the Kauffman Firm Survey (KFS, 2004–2011) to substantiate the angels’ share hypothesis. Moreover, we show how angels’ share and family investors interact in new ventures. In study 2, we analyzed data from the Entrepreneurship Database Program (EDP, 2013–2018) to check the robustness of the angels’ share hypothesis. Both studies point to the importance of ownership thresholds in predicting angel investor activism in the strategy of new ventures.

Keywords: Angel investors; Family investors; Innovation; Market performance; Ownership structure (search for similar items in EconPapers)
JEL-codes: L14 L25 L26 M13 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11187-022-00695-6

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