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Angel investors: the impact of regret from missed opportunities

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  • Jeffrey Sohl

    (University of New Hampshire)

Abstract

As suppliers of critical risk capital, angels are routinely faced with a multitude of investment opportunities and typically invest in less than 20% of these prospects. Angels need to access these opportunities, decide which investments to pursue, and try to predict future winners and losers all within an environment typified by a high degree of information asymmetry. This research examines the real-time actions and decisions of angel investors and the effect of the investment regret or inaction on future investment decision-making. Angels who missed a past opportunity that subsequently realized a positive return are significantly less likely to invest in subsequent similar opportunities. Also, the dynamism of the market and the experience of the investor play important roles in influencing subsequent investment decisions once an investor has missed an opportunity. This research adds a level of granularity by identifying a new and potentially influential dimension—missed opportunities are an influential force in angel investment decision-making.

Suggested Citation

  • Jeffrey Sohl, 2022. "Angel investors: the impact of regret from missed opportunities," Small Business Economics, Springer, vol. 58(4), pages 2281-2296, April.
    • Handle: RePEc:kap:sbusec:v:58:y:2022:i:4:d:10.1007_s11187-021-00512-6
    DOI: 10.1007/s11187-021-00512-6
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    Cited by:

    1. Ikenna Uzuegbunam & Brandon Ofem & Joe Fox & Satish Nambisan, 2023. "The angels’ share hypothesis in new firms," Small Business Economics, Springer, vol. 61(2), pages 843-865, August.
    2. Jianhong Chen & Jeffrey E. Sohl & Wan-Chien Lien, 2023. "Angel Investors’ Political Ideology and Investments in Women-Owned Ventures," Journal of Business Ethics, Springer, vol. 188(2), pages 379-396, November.

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