Abstract

The importance of Informal Investors/Business Angels as a source of risk capital to early-growth enterprises continues to gain increased policy recognition. Governments now widely support this informal sector with public funded initiatives aimed at both increasing the supply of early stage investors (e.g. via income and capital tax incentives), and reducing information asymmetries in the operation of this informal capital market (e.g. via Business Angel networks). Further, we seek to ascertain whether or not persons with direct entrepreneurial experience also represent a group with a high probability of subsequently investing in other young firms. Evidence of owner-managers being particularly likely to become informal investors would support a ‘virtuous circle’ argument.

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