Angel investor decision-making about investing in a startup: The key role of founder characteristics

Rozhodování angel investora o investici do start-upu: Klíčová role charakteristik zakladatelů

Vít Paclík and Pavel Svačina

Oceňování, 2024, vol. 17, issue 2, 3-26

Abstract: Does an early-stage startup have future potential or not? This is a question that many investors or start-up appraisers ask themselves. A qualified answer to this question can be obtained by learning how and why experienced business angel investors, who are those who invest substantial sums in early-stage start-ups, make empirical decisions. In this article, we identify the key signals that are decisive for Mr. Jiří Hlavenka, a experienced Czech angel investor in IT sector with a history of more than 50 invested start-ups and several thousand analyzed investment opportunities. The results show that the angel investor's decision is primarily a "bet on people" - his decision to invest in an early-stage start-up is most influenced by the specific set of skills and abilities of the founder(s), namely: (i) the ability to execute a business, (ii) being a good leader, (iii) being a good merchant, (iv) ability to build a team, (v) all-round versatility, (vi) carrying a strong vision. The findings of this article may be of interest, among other things, to appraisers, investors who estimate the future potential of new start-ups, or start-up founders who use the investments themselves in the early stages of their business.

Keywords: Business angel; Angel investor; Start-up success; Start-up founder; Valuation of start-ups; Úspěch start-upu; Zakladatel start-upu; Oceňování start-upů (search for similar items in EconPapers)
JEL-codes: D81 M13 M21 O16 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.18267/j.ocenovani.294

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