Horse vs. Jockey? How stage of funding process and industry experience affect the evaluations of angel investors

Cheryl R. Mitteness, Melissa S. Baucus and Richard Sudek

Venture Capital, 2012, vol. 14, issue 4, 241-267

Abstract: Angel investors make evaluations at different stages of the funding process; so we explore how the importance angels place on different investment criteria varies and how industry experience impacts their evaluations. Data were collected at the screening stage as angel investors evaluated the strength of the entrepreneur and the opportunity, and made decisions regarding whether the deal should proceed to due diligence, as well as their personal interest in making an investment. Additional data were collected regarding whether these angels made an investment at the funding stage. We tested our hypotheses using a multilevel approach to account for the nested nature of the data -- multiple evaluations nested within each angel, nested within each screening presentation. Our results show that the entrepreneur matters most when angels are deciding whether a deal should proceed to due diligence; opportunity strength represents a more important investment criterion when angels switch to determining whether a deal matches their own investment goals as the deal progresses through the funding process. Additionally, we find that three types of industry experience differ in their impact on the evaluation process. The findings offer new insights and underscore the importance of considering how individual characteristics impact evaluations of funding potential.

Date: 2012
References: View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://hdl.handle.net/10.1080/13691066.2012.689474 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:veecee:v:14:y:2012:i:4:p:241-267

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TVEC20

DOI: 10.1080/13691066.2012.689474

Access Statistics for this article

Venture Capital is currently edited by Colin Mason and Richard T. Harrison

More articles in Venture Capital from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().