Entrepreneurs meet financiers: Evidence from the business angel market

Angela Cipollone and Paolo Giordani

Journal of Business Venturing, 2019, vol. 34, issue 5, -

Abstract: This paper formalizes and estimates the process of search and matching between entrepreneurs and financiers in the business angel (BA) market. Our theoretical model describes the market for entrepreneurial finance as a fair in which the two sides of the market can meet bilaterally and transform a rough entrepreneurial idea into a real start-up firm. We then collect a new dataset from the BA markets of 17 developed countries for the period 1996–2014, and we estimate the aggregate matching function expressing the number of deals as a function of the number of submitted entrepreneurial projects and of business angels. Empirical findings confirm the technological features assumed in the theoretical literature: positive and decreasing marginal returns to both inputs (stepping on toes effect), technological complementarity across the two inputs (thick market effect) and constant returns to scale. We discuss the theoretical and policy implications of these findings.

Keywords: Entrepreneurial finance; Angel investors; Matching function estimation; Constant returns to scale (search for similar items in EconPapers)
JEL-codes: C78 L26 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:34:y:2019:i:5:6

DOI: 10.1016/j.jbusvent.2018.11.003

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