Understanding entrepreneur and business angel investment capabilities, expectations, and relationships

Informal investors have been identified as the most prevalent source of finance for new ventures. Much of the research on informal investors has been concentrated on Business Angels (BAs). BAs have been identified as high net worth middle-aged males that typically are unrelated to the entrepreneurs in which they invest. More recently, however, a much larger group of investors has been identified that fall outside this definition. Investors who are affiliated with entrepreneurs by way of family, friend, or acquaintance account for more than 85% of all early stage new venture financing. Yet, there is little research into BA investment expectations and capabilities and how these coincide with entrepreneurs. This research identifies similarities and differences in the investment expectations and capabilities between entrepreneurs, affiliated business angels (ABAs) (those that have an affiliation with the entrepreneurs in which they invest) and UBAs (unaffiliated business angels). By better understanding the expectations and capabilities of these two groups and the degree to which there is convergence or dissonance, steps can be taken to reduce entrepreneur-angel conflict and improve business (and investment) success.