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Article
Publication date: 20 March 2017

Jaume Argerich and Claudio Cruz-Cázares

The lack of a standard definition and data sources makes it hard to compare findings and advance our knowledge in the business angel’s domain. The purpose of this paper is…

Abstract

Purpose

The lack of a standard definition and data sources makes it hard to compare findings and advance our knowledge in the business angel’s domain. The purpose of this paper is to tackle this problem by presenting a proposal of a potential definition of business angels that it based on ten issues identified in 30 years of business angels’ research.

Design/methodology/approach

The paper reviews 24 studies on business angels and classifies definition inconsistencies found in ten different issues. Those differences are compared with methodological choices on sampling and with subsequent results.

Findings

The authors observe a connection between definitional and sampling choices, and the results obtained. Inconsistent definitions can lead to results that are more than 400 times higher in terms of investment per project, for example.

Research limitations/implications

The authors believe that the main implication of proposing a standard definition of business angles could help the academia in decreasing the great observed diversity which is actually leading to inconsistent and incomparable results that limit our understanding of this phenomenon.

Originality/value

This paper differs from previous studies as it tackles the problem by identifying the definitional issues and presents a framework in order to build a consensus definition, rather than just comparing definitions.

Details

Management Decision, vol. 55 no. 2
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 13 December 2011

Ben Spigel

Purpose – This chapter examines how informal and formal entrepreneurial institutions are influenced by economic crises. These institutions act as the foundation for many…

Abstract

Purpose – This chapter examines how informal and formal entrepreneurial institutions are influenced by economic crises. These institutions act as the foundation for many, if not all, entrepreneurial activities, but they are highly vulnerable to change during times of crisis.

Design/methodology/approach – This chapter uses a case study of software entrepreneurs in Ottawa, Canada, to better understand the influence of the 2001 and 2008 recessions on the social and economic aspects of entrepreneurship. This case is examined through a set of 39 semi-structured interviews with entrepreneurs, investors, and economic development officers.

Findings – While informal entrepreneurial institutions have adapted to a changing economic environment, formal institutions and government programs have so far failed to do this. This results in less effective entrepreneurship support programs.

Research limitations/implications – As with other qualitative case studies, these findings are not generalizable to other regions. This chapter calls for further research is needed to better understand the social forces behind institutional change.

Practical implications – This chapter argues that entrepreneurship support programs must be customized to the informal social institutions that underlie all entrepreneurial behavior and practices. This alignment potentially increases the usefulness of such programs to entrepreneurs.

Originality/value of the paper– While entrepreneurship in Ottawa has been carefully studied, there has been very little work examining how technology entrepreneurship in Ottawa has fared after the decline of the telecommunications market. This chapter is useful to both entrepreneurship scholars as well as practitioners and policy makers interested in how entrepreneurial institutions react to crises.

Details

Entrepreneurship and Global Competitiveness in Regional Economies: Determinants and Policy Implications
Type: Book
ISBN: 978-1-78052-395-8

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Article
Publication date: 1 December 2005

Truls Erikson

The purpose of this paper is to uncover the strategic nature of formal seed capital in Norway as opposed to equally sized venture capital firms.

Abstract

Purpose

The purpose of this paper is to uncover the strategic nature of formal seed capital in Norway as opposed to equally sized venture capital firms.

Design/methodology/approach

As the population of Norwegian seed capital firms is embedded in this study, a differential approach is taken when contrasting these seed capital firms with venture capital firms of approximately the same size.

Findings

The findings indicate that seed capital firms take higher market risk than their counterparts, and that they diversify to a larger extent than comparable venture capital firms. The latter appears to be a function of the former.

Originality/value

This study reviews previous categorizations of seed capital providers, henceforth building towards an overall taxonomy of seed capital.

Details

Journal of Small Business and Enterprise Development, vol. 12 no. 4
Type: Research Article
ISSN: 1462-6004

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Abstract

Details

Reflections and Extensions on Key Papers of the First Twenty-Five Years of Advances
Type: Book
ISBN: 978-1-78756-435-0

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Article
Publication date: 21 December 2020

Garrison Hongyu Song and Ajeet Jain

This paper aims to explore the allocation of the exit value of a start-up company in market equilibrium between an angel investor and an entrepreneur in the very…

Abstract

Purpose

This paper aims to explore the allocation of the exit value of a start-up company in market equilibrium between an angel investor and an entrepreneur in the very early-stage financing market.

Design/methodology/approach

The theoretical model is established based on the two-sided random search theory and the model’s ability to match the empirical data is evaluated via simulation.

Findings

The model indicates that the allocation of the final investment outcome is not proportional to the initial investments by the angel investor and the entrepreneur. The simulation results show that the continued investment by the entrepreneur and the private benefit acquired by the angel investor have a more profoundly negative influence on the angel investor’s share of the exit value of the start-up company. Moreover, the market search structure represented by the matching probability of an angel investor to an entrepreneur has a more significant impact on the angel investor’s share than the other model parameters.

Originality/value

The importance of market search friction in the very early-stage financing market is emphasized. The concepts of continued investments and private benefits are introduced and quantified for the first time under the framework of angel investment. The impacts of such model parameters as the matching probability of an angel investor to an entrepreneur, the success rate of a start-up company, the bargaining power of an angel investor and the discount rate on the allocation of the exit value of the start-up company are investigated as well.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 10 February 2021

Bree Dority, Sarah J. Borchers and Suzanne K. Hayes

This study aims to investigate how the language used in US Title II equity crowdfunding campaign descriptions relates to campaign success.

Abstract

Purpose

This study aims to investigate how the language used in US Title II equity crowdfunding campaign descriptions relates to campaign success.

Design/methodology/approach

Data on >3,200 equity offerings from 12 Title II platforms was obtained from 2013 to 2016. The aspects of the campaign descriptions that are focused on are tone and two measures of readability: information quantity – the amount of information available to the investor and information quality – the ease of understanding of the passage of text. Tobit regressions with sector-clustered standard errors are used for estimation while controlling for company-specific variables, market sentiment and platform, regional, sector and time effects. Results are robust to alternative estimation approaches.

Findings

Inverse U-shaped relationships exist between information quantity, information quality and tone and Title II equity crowdfunding campaign success. Overall, less is more as it appears that an intermediate level of information – quantity, quality and tone – is optimal in terms of being a factor that contributes to equity crowdfunding campaign success.

Originality/value

Extends the use of textual analysis to the equity crowdfunding environment in the USA where such analysis is lacking and provides empirical evidence that the language used (e.g. sentiment) in US Title II equity-based crowdfunding campaign descriptions does influence campaign success. It provides empirical evidence of and extends the concept of information overload to the entrepreneurial finance sub-field and indicates tone may be an additional information attribute to consider in this context as contributing to overload.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 5 September 2016

Vanessa Ratten, Joao Ferreira and Cristina Fernandes

The purpose of this paper is to examine how entrepreneurs in emerging economies use their knowledge to help create new businesses and increase their profitability in the…

Abstract

Purpose

The purpose of this paper is to examine how entrepreneurs in emerging economies use their knowledge to help create new businesses and increase their profitability in the international marketplace. Emerging economies are playing an increasingly important part in the global marketplace, particularly in terms of how they use knowledge-based resources and entrepreneurial networks.

Design/methodology/approach

The methodological approach of this paper is to analyse the entrepreneurial processes in emerging economies by using the Global Entrepreneurship Monitor (GEM) to evaluate whether the stage of economic development affects intention rates of individuals to start new businesses. Utilising a panel approach to evaluating entrepreneurial intention from 2009 to 2013, a number of hypotheses are tested to see how entrepreneurial knowledge and network knowledge affect the likelihood to engage in new business activity.

Findings

These hypotheses are analysed based on the economic development stage of a country. The findings of the hypotheses suggest that entrepreneurial and network knowledge can help determine an individual’s intention to start a business, but although network knowledge is related to economic development, entrepreneurial knowledge is not significant.

Research limitations/implications

The GEM report is helpful in seeing longitudinal changes in entrepreneurship from emerging economies. This helps increase research interest in emerging economies by encouraging more appropriate policy aimed at increasing new business creation.

Practical implications

Implications for entrepreneurs and public policymakers in emerging economies are stated, which suggest that it is important to foster entrepreneurship education. Suggestions for future research linking knowledge-based resources and entrepreneurial intentions in emerging economies are also highlighted.

Originality/value

The findings demonstrate that the propensity of individuals to engage in new business creation in emerging economies is different to those in developed countries because of funding constraints and lack of access to the appropriate skills.

Details

Review of International Business and Strategy, vol. 26 no. 3
Type: Research Article
ISSN: 2059-6014

Keywords

Content available
Article
Publication date: 1 March 2015

Enrique Nunez

Using the Panel Study of Entrepreneurial Dynamics II dataset, we examine the role that household income plays in the emergence of consumer-oriented start-ups by individual…

Abstract

Using the Panel Study of Entrepreneurial Dynamics II dataset, we examine the role that household income plays in the emergence of consumer-oriented start-ups by individual (solo), family-based (family), and non-family based start-ups (team). In particular, we address the research question: Does household income impact firm emergence, and if so, is emergence impacted differently based on start-up configuration? Our results indicate that household income does have a significant impact on average firm emergence, as well as on emergence growth rates for solo and family firms, playing an especially significant role for family firms. Furthermore, we found that household income is not a significant predictor of start-up activity completion for teams. Results from our study reinforce the extant literature on the benefits of starting a firm with teams, and suggests that these enterprise types may provide a more stable platform on which to launch a start-up. Implications of these findings and opportunities for future research are offered.

Details

New England Journal of Entrepreneurship, vol. 18 no. 2
Type: Research Article
ISSN: 2574-8904

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Article
Publication date: 20 November 2019

Hamed Ojaghi, Mahdi Mohammadi and Hamid Reza Yazdani

The purpose of this study set out to introduce an alternative framework for explaining the formation of the innovation ecosystem based on the systematic literature review…

Abstract

Purpose

The purpose of this study set out to introduce an alternative framework for explaining the formation of the innovation ecosystem based on the systematic literature review (SLR) and ecosystemic approach.

Design/methodology/approach

This paper is an SLR of studies from the year 2008-2018 that investigating startups’ innovation. SLR approach being used exploration, interpretation and communication method, which composed of seven steps as follows exploring topics, searching, organizing, evaluating and expanding, integrating and communicating. The output of this process is 63 documents that applied to synthesize the formation framework.

Findings

The systematic review of literature has shown that researchers in recent years have considered some entities such as incubators, financials suppliers, accelerators, universities and companies in relation to the startup innovations, which are described in this paper as key actors. The study of the relationship between these actors in the documents led to the identification of interactional necessities, including structures, infrastructures and networks. Finally, the processes studied in the literature were classified into three types of mechanisms, namely, the genesis, growth and development of startups innovations.

Research limitations/implications

The SLR approach is subject to limitations because some poor explanations amongst previous researchers may be repeated and reinforced. Also, in the protocol adopted in this paper, documents are limited in English.

Practical implications

The introduced frammework can be useful in identifying and understanding the requirements of startups and creating effective policies for their innovation development.

Originality/value

This paper reviews, summarizes and integrates the growing and scattered literature of the innovation ecosystem of the startups and delivers new facts for the future development of this field.

Details

Journal of Science and Technology Policy Management, vol. 10 no. 5
Type: Research Article
ISSN: 2053-4620

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Article
Publication date: 1 August 1996

Richard Harrison and Colin Mason

Concern about the equity gap in the UK has existed for more than 60 years. Despite various government measures and institutional responses (e.g. the development of a…

Abstract

Concern about the equity gap in the UK has existed for more than 60 years. Despite various government measures and institutional responses (e.g. the development of a venture capital industry) an equity gap still persists. Current debate has recognized the role of the informal venture capital market as a source of risk capital for SMEs. Argues that this market is both inefficient and underdeveloped, due largely to information deficiencies which hinder contact between potential investors and entrepreneurs seeking finance. Against this background, identifies the role of business angel networks (BANs) as a key means of stimulating the flow of informational venture capital in the UK. In particular, a government scheme to provide pump‐priming assistance to establish five local BAN demonstration projects is shown to have achieved impressive results. However, with the recent emergence of a number of private sector BANs, the continued role of government is now being questioned. Further demonstrates that public sector BANs, operating on a local scale, are filling a different market niche from that of private sector BANs, which operate predominantly on a national scale. Concludes that the top priority for policy is to ensure that all parts of the UK are served by local BANs. An appropriate way forward might be to build on experimental networking arrangements between local, public sector BANs and national, privately operated BANs.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 2 no. 2
Type: Research Article
ISSN: 1355-2554

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