Angel Investors: Early Firm Owners

John Berns and Karen Schnatterly

Chapter Chapter 10 in Shareholder Empowerment, 2015, pp 223-238 from Palgrave Macmillan

Abstract: Abstract Angel investors are often the first outside investors in a firm (Wetzel, 1983). Given the history of the firm prior to their financing—that is, virtually new and unknown—their decision to provide funding for the entrepreneurial venture poses quite an investment risk (Mason & Harrison, 2002). Ventures perceived to be less risky while still offering an acceptable return on investment are more likely to receive financing (Ganzach, 2000; Lange, Leleux, & Surlemont, 2003; Tyebjee & Bruno, 1984). Certain firm and angel characteristics influence the angel’s perception of the investment and decision to participate (Galbraith, De Noble, & Ehrlich, 2009). Once involved as part-owners, the angels themselves can have a strong influence on the firm and its functioning (Prowse, 1998). Provided that the firm survives and moves more closely to an investor exit (e.g., initial public offering [IPO] or buyout), the angels also play a role with regard to the next-stage owners.

Keywords: Venture Capital; Initial Public Offering; Private Equity; Entrepreneurial Firm; Business Venture (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-37393-9_10

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DOI: 10.1057/9781137373939_10

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