FIRST-ROUND VALUATION OF ANGEL-BACKED COMPANIES: THE ROLE OF INVESTOR HUMAN CAPITAL

V. Collewaert (v.collewaert@maastrichtuniversity.nl), Sophie Manigart and -
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Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: This paper investigates how angel investors’ human capital affects the valuation of their portfolio companies at initial investment, based on the pre-money valuation of 59 investments in young Belgian companies. We show that entrepreneurs are able to negotiate higher valuations with angel investors who have a business degree, more entrepreneurial experience or previous professional law experience. As such, this result is in contrast with the behavior of venture capital investors. Angel investors with financial experience, however, value their investments lower: their financial background leads them to stress the financial side of the deal more.

Keywords: risk capital; business angels; angel investors; human capital; valuation (search for similar items in EconPapers)
JEL-codes: G24 L26 M13 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2009-12
New Economics Papers: this item is included in nep-ent
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http://wps-feb.ugent.be/Papers/wp_09_624.pdf (application/pdf)

Related works:
Working Paper: First-round valuation of angel-backed companies: the role of investor human capital (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:09/624

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