Abstract

This research is an attempt to link knowledge about business angels’ individual cognitive features and about their co-investment practice with professional venture funds in explaining differential rates of growth of young entrepreneurial ventures. Previous research has identified two cognitive dimensions, along which business angels may differ, and which appear as particularly relevant in an entrepreneurial setting: prediction and control (Wiltbank et al. 2009). Our central assumption is that business angels who have a predictive approach when they make investment decisions are more likely to solicit professional venture funds at early stages in the investment process, when they perceive a high potential growth, because their predictive approach enables them to translate perceived growth prospects to professional investors at a low cognitive cost. This makes simultaneous (vs. sequential) co-investment with venture capitalists a viable solution and, given the complementarities between business angels and formal venture capitalists, such a configuration can be considered to be particularly conducive to strong growth rates.

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