The Role of Business Angels in the Early-Stage Financing of Startups: A Systematic Literature Review

Jürgen Lange (), Stefan Rezepa and Monika Zatrochová
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Jürgen Lange: Digital Office 24 GmbH, Bethmannstraße 8, 60311 Frankfurt am Main, Germany
Stefan Rezepa: Apotheke am Mehringplatz, Mehringplatz 12, 10969 Berlin, Germany
Monika Zatrochová: Institute of Management, Department of Management of Chemical and Food Technologies, Slovak University of Technology in Bratislava, Vazovova 5, 812 43 Bratislava, Slovakia

Administrative Sciences, 2024, vol. 14, issue 10, 1-21

Abstract: Funding is an essential factor for the viability and growth of startups. As a result, business angels play a crucial role in providing financial support to these business companies, particularly those that are innovative and have significant potential for growth. This study sought to determine the role business angels play in the early-stage financing of startups. Specifically, the study looked at the value-added services provided by business angels, business angel funding impact on startup survival rates, the effectiveness of business angel networks’ impact on facilitating startup funding, and business angels’ contribution to the development of entrepreneurial ecosystems beyond financial investment for startups. This study adopted a systematic literature review methodology, employing key theoretical methods such as analysis, synthesis, comparison, and induction to assess the role business angels play in the early-stage financing of startups. The findings show that business angels’ expertise, networks, and mentorship emerge as critical value-added startup services. Similarly, it was found that business angel funding positively influences startup survival; however, other factors also influence this impact. Moreover, the results show that business angel networks play a significant role in facilitating startup funding. Furthermore, beyond financial investment for startups, it was found that business angels contribute significantly to the development of entrepreneurial ecosystems, including prioritizing the contributions of ecosystem builders in startup screening, access to mentoring, and entrepreneurial education. The study concluded that business angels play a positive role in the early-stage financing of startups.

Keywords: business angels; early-stage financing; startup; startup funding; venture capital (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2024
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