(Im)perfect Substitutes: Business angels and crowd sourced start-up funding

Stefano Bonini, Vincenzo Capizzi, Giancarlo Giudici and Francesca Tenca

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This study provides comparative empirical evidence on the fundraising outcomes and the post-funding performances of ventures supported by either business angels or crowd-investors. Building on a multi-year original dataset combining repeated annual surveys on both angels and equity crowdfunding (ECF) markets, we find that while investing in similar companies, ECF-backed ventures raise less capital than BA-backed ones, acquire a smaller percentage of capital and are less likely to raise follow-on equity financing. These results suggest that ECF and BA are imperfect substitutes that act as screening mechanisms of unobservable heterogenous firms with different risk profiles, growth trajectories and funding needs.

Keywords: Business angels; Equity crowdfunding; Startup financing; Follow-on investment (search for similar items in EconPapers)
JEL-codes: G21 G23 G30 L26 M13 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025006951

DOI: 10.1016/j.iref.2025.104532

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