Abstract

Informal equity capital investments by Business Angels take an important role in the new venture creation process and in contrast to most other financial investors Business Angels often have a distinct entrepreneurial background of their own. Aside from monetary funds Angel investors also add non-financial value to their investee businesses through active involvement and hence not only have an entrepreneurial background, but also act entrepreneurially in the post-investment phase of venture financing. This suggests the applicability of entrepreneurial theories to understand and explain underlying mechanisms and outcomes of Angel investments. Although Effectuation and Entrepreneurial Bricolage are two emerging and broadly discussed theory streams in the entrepreneurship literature, only one dimension of the effectuation body has found its way in the informal venture financing context, while a comprehensive analysis of both theories is missing so far. Building on these theories, this paper sets out to empirically investigate unexplored antecedents of Business Angels’ non-financial value adding potential. The paper proposes that applying the principles of Entrepreneurial Bricolage and Effectuation in their decision-making positively influences the informal investor’s potential added value in the post investment phase.

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