Promoting Informal Venture Capital: I. Business Introduction Services
Interviewees were asked to say what kinds of assistance would have the greatest effect on their investment activity. Their responses are shown in Figure 13.1. It is clear from this information that the biggest impact, in the opinion of investors themselves, comes from helping business angels to identify investment opportunities, along with providing opportunities to co-invest with professional venture capital funds and with other business angels. On the other hand, technical assistance with investment appraisal and valuation, help in preparing the investment agreement and help in managing investments each have little impact on investment activity. This closely corresponds to the response of UK business angels to a similar question (Mason and Harrison, 1997a). In other words, the later in the investment process the less business angels require external assistance. This is quite logical in view of the findings reported in part 1. Most business angels believe that on account of their entrepreneurial background they possess the technical skills required to appraise, value and structure investments. Moreover, on account of their internal locus-of-control beliefs, they will wish to take on the responsibility for these tasks themselves rather than devolving them to someone else. However, in view of the difficulties which business angels encounter in finding suitable investment opportunities they are likely to be responsive to help which enhances their deal flow.
KeywordsVenture Capital Investment Opportunity Investment Activity Venture Capital Fund Investment Process
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End Notes to Chapter 13
- 1.A review of the investments made through UK business introduction services in the period mid-1995 to mid-1996 reported that the amount invested by business angels was £22.2 million, but in 38% of cases the angel’s investment was part of a larger financial package in which a further £22.8 million was provided in the form of additional equity, loans and grants (BVCA, 1996c).Google Scholar
- 2.See Chapter 1, note 6, for the exact industrial composition of the sample.Google Scholar