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Business Angel Investment Activity in the Financial Crisis: UK Evidence and Policy Implications

Author

Listed:
  • Colin M Mason

    (Adam Smith Business School, University of Glasgow, Glasgow G12 8QQ, Scotland)

  • Richard T Harrison

    (University of Edinburgh, Management School, University of Edinburgh, Edinburgh EH8 9JS, Scotland)

Abstract

The 2008 financial crisis has transformed the financial environment for small and medium-sized enterprises, resulting in significant declines in the availability of bank lending and venture capital. This has prompted government intervention to improve the availability of debt and equity capital. Whereas there are comprehensive statistics on bank lending and venture capital investments, equivalent information on business angel investment activity is lacking. This paper draws upon three sources of evidence on business angel investment activity in the UK—business angel networks, Scottish angel groups, and individual angels—to reveal for the first time how the angel market has fared during the early stage of the financial crisis. While the evidence is not entirely consistent, it is clear that angel investment activity has held up since the onset of the financial crisis. This further emphasises the economic significance of business angels and underlines the need for ongoing government support. Policy options are reviewed.

Suggested Citation

  • Colin M Mason & Richard T Harrison, 2015. "Business Angel Investment Activity in the Financial Crisis: UK Evidence and Policy Implications," Environment and Planning C, , vol. 33(1), pages 43-60, February.
    • Handle: RePEc:sae:envirc:v:33:y:2015:i:1:p:43-60
    DOI: 10.1068/c12324b
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    References listed on IDEAS

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    1. David North & Robert Baldock & Farid Ullah, 2013. "Funding the growth of UK technology-based small firms since the financial crash: are there breakages in the finance escalator?," Venture Capital, Taylor & Francis Journals, vol. 15(3), pages 237-260, July.
    2. Colin Mason & Yannis Pierrakis, 2013. "Venture Capital, the Regions and Public Policy: The United Kingdom since the Post-2000 Technology Crash," Regional Studies, Taylor & Francis Journals, vol. 47(7), pages 1156-1171, July.
    3. Mason, Colin M & Harrison, Richard T, 1997. "Business Angel Networks and the Development of the Informal Venture Capital Market in the U.K.: Is There Still a Role for the Public Sector?," Small Business Economics, Springer, vol. 9(2), pages 111-123, April.
    4. Ellen Farrell & Carole Howorth & Mike Wright, 2008. "A review of sampling and definitional issues in informal venture capital research," Venture Capital, Taylor & Francis Journals, vol. 10(4), pages 331-353, April.
    5. Richard Harrison & Colin Mason, 1996. "Developing the Informal Venture Capital Market: A Review of the Department of Trade and Industry's Informal Investment Demonstration Projects," Regional Studies, Taylor & Francis Journals, vol. 30(8), pages 765-771.
    6. Colin Mason, 2009. "Venture capital in crisis?," Venture Capital, Taylor & Francis Journals, vol. 11(4), pages 279-285, October.
    7. Bruce Cerullo & Bruce Sommer, 2002. "Helping healthcare entrepreneurs: A case study of Angel Healthcare Investors, LLC," Venture Capital, Taylor & Francis Journals, vol. 4(4), pages 325-330, October.
    8. Colin Mason & Richard Harrison, 2006. "After the exit: Acquisitions, entrepreneurial recycling and regional economic development," Regional Studies, Taylor & Francis Journals, vol. 40(1), pages 55-73.
    9. William H. Payne & Matthew J. Macarty, 2002. "The anatomy of an angel investing network: Tech Coast Angels," Venture Capital, Taylor & Francis Journals, vol. 4(4), pages 331-336, October.
    10. Geoff Gregson & Sacha Mann & Richard Harrison, 2013. "Business Angel Syndication and the Evolution of Risk Capital in a Small Market Economy: Evidence from Scotland," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 34(2), pages 95-107, March.
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    Cited by:

    1. Annalisa Croce & Jose Martí & Carmelo Reverte, 2019. "The role of private versus governmental venture capital in fostering job creation during the crisis," Small Business Economics, Springer, vol. 53(4), pages 879-900, December.
    2. Othman, Norfaizah & Abdul-Majid, Mariani & Abdul-Rahman, Aisyah, 2017. "Partnership financing and bank efficiency," Pacific-Basin Finance Journal, Elsevier, vol. 46(PA), pages 1-13.
    3. Cox, Kevin C. & Lortie, Jason & Stewart, Steven A., 2017. "When to pray to the angels for funding: The seasonality of angel investing in new ventures," Journal of Business Venturing Insights, Elsevier, vol. 7(C), pages 68-76.

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