IDEAS home Printed from https://ideas.repec.org/a/spr/fininn/v11y2025i1d10.1186_s40854-024-00700-9.html
   My bibliography  Save this article

Angel investments of small family business entrepreneurs: cross-country evidence

Author

Listed:
  • Viviana Fernandez

    (Universidad Adolfo Ibáñez, Escuela de Negocios)

Abstract

Recent literature has focused on the venture capital investments of large family firms made through their family offices. However, evidence regarding informal venture capital provided to nascent entrepreneurs by small family businesses is scant. I contribute to the literature by modeling the angel investments of about 30,000 family and non-family business entrepreneurs across 49 countries, who contributed about $64 million to businesses started by other entrepreneurs over a 3-year period. Based on this sample, I conclude that in countries with higher rates of small family businesses, angel investors are likely fewer, and the amounts invested in start-ups are also lower. Furthermore, I conclude that the owners/managers of small family businesses invest comparatively less capital in start-ups, irrespective of family relationships. I infer that this is attributable to the financing preferences of family businesses, which favor the use of internal resources for their continuity and the growth of their family capital.

Suggested Citation

  • Viviana Fernandez, 2025. "Angel investments of small family business entrepreneurs: cross-country evidence," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 11(1), pages 1-36, December.
    • Handle: RePEc:spr:fininn:v:11:y:2025:i:1:d:10.1186_s40854-024-00700-9
    DOI: 10.1186/s40854-024-00700-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s40854-024-00700-9
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1186/s40854-024-00700-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lerner, Josh & Schoar, Antoinette & Sokolinski, Stanislav & Wilson, Karen, 2018. "The globalization of angel investments: Evidence across countries," Journal of Financial Economics, Elsevier, vol. 127(1), pages 1-20.
    2. Estapé-Dubreuil, Glòria & Ashta, Arvind & Hédou, Jean-Pierre, 2016. "Micro-equity for sustainable development: Selection, monitoring and exit strategies of micro-angels," Ecological Economics, Elsevier, vol. 130(C), pages 117-129.
    3. Block, Joern & Fisch, Christian & Vismara, Silvio & Andres, René, 2019. "Private equity investment criteria: An experimental conjoint analysis of venture capital, business angels, and family offices," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 329-352.
    4. Gómez-Mejía, Luis R. & Herrero, Inés, 2022. "Back to square one: The measurement of Socioemotional Wealth (SEW)," Journal of Family Business Strategy, Elsevier, vol. 13(4).
    5. Douglas Cumming & Minjie Zhang, 2019. "Angel investors around the world," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(5), pages 692-719, July.
    6. Sebastián Uriarte & Jorge Espinoza-Benavides & Domingo Ribeiro-Soriano, 2023. "Engagement in entrepreneurship after business failure. Do formal institutions and culture matter?," International Entrepreneurship and Management Journal, Springer, vol. 19(2), pages 941-973, June.
    7. Sharon Poczter & Melanie Shapsis, 2018. "Gender disparity in angel financing," Small Business Economics, Springer, vol. 51(1), pages 31-55, June.
    8. Sebastián Uriarte & Jorge Espinoza-Benavides & Domingo Ribeiro-Soriano, 2023. "Correction to: Engagement in entrepreneurship after business failure. Do formal institutions and culture matter?," International Entrepreneurship and Management Journal, Springer, vol. 19(2), pages 975-975, June.
    9. 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.
    10. Chiara Peroni & Cesare A. F. Riillo & Francesco Sarracino, 2016. "Entrepreneurship and immigration: evidence from GEM Luxembourg," Small Business Economics, Springer, vol. 46(4), pages 639-656, April.
    11. De Clercq, Dirk & Meuleman, Miguel & Wright, Mike, 2012. "A cross-country investigation of micro-angel investment activity: The roles of new business opportunities and institutions," International Business Review, Elsevier, vol. 21(2), pages 117-129.
    12. Maung, Min, 2024. "The bright side of social trust and entrepreneurial finance," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 778-795.
    13. Reina, Walter & Pla-Barber, José & Villar, Cristina, 2023. "Socioemotional wealth in family business research: A systematic literature review on its definition, roles and dimensions," European Management Journal, Elsevier, vol. 41(6), pages 1000-1020.
    14. Michael N. Young & Mike W. Peng & David Ahlstrom & Garry D. Bruton & Yi Jiang, 2008. "Corporate Governance in Emerging Economies: A Review of the Principal–Principal Perspective," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 196-220, January.
    15. Harrison, Richard T. & Bock, Adam J. & Gregson, Geoff, 2020. "Stairway to heaven? rethinking angel investment policy and practice," Journal of Business Venturing Insights, Elsevier, vol. 14(C).
    16. Rahul Krushnaji Wadichar & Prashant Manusmare & Mukul Abasaheb Burghate, 2024. "Entrepreneurial Ecosystem: A Systematic Literature Review," Vision, , vol. 28(2), pages 143-156, April.
    17. Lorna Collins & Louise Grisoni & Claire Seaman & Stuart Graham & Dominique Otten & Rebecca Fakoussa & John Tucker, 2012. "The Modern Family Business," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-00133-7, December.
    18. Colin Mason & Tiago Botelho & Richard Harrison, 2019. "The changing nature of angel investing: some research implications," Venture Capital, Taylor & Francis Journals, vol. 21(2-3), pages 177-194, July.
    19. Bahadır Ergün & Ömer Tuğsal Doruk, 2020. "Effect of financial constraints on the growth of family and nonfamily firms in Turkey," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 6(1), pages 1-24, December.
    20. Solodoha, Eliran & Rosenzweig, Stav & Harel, Shai, 2023. "Incentivizing angels to invest in start-ups: Evidence from a natural experiment," Research Policy, Elsevier, vol. 52(1).
    21. Francesca Tenca & Annalisa Croce & Elisa Ughetto, 2018. "Business Angels Research In Entrepreneurial Finance: A Literature Review And A Research Agenda," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1384-1413, December.
    22. Rui Falcão & Maria João Carneiro & António Carrizo Moreira, 2023. "Why do business angels invest? Uncovering angels’ goals," Cogent Business & Management, Taylor & Francis Journals, vol. 10(2), pages 2234134-223, December.
    23. Lingfei Deng & Qiang Ye & DaPeng Xu & Wenjun Sun & Guangxin Jiang, 2022. "A literature review and integrated framework for the determinants of crowdfunding success," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-70, December.
    24. Markku Maula & Erkko Autio & Pia Arenius, 2005. "What Drives Micro-Angel Investments?," Small Business Economics, Springer, vol. 25(5), pages 459-475, December.
    25. Polona Tominc & Miroslav Rebernik, 2007. "Growth Aspirations and Cultural Support for Entrepreneurship: A Comparison of Post-Socialist Countries," Small Business Economics, Springer, vol. 28(2), pages 239-255, March.
    26. Edelman, Linda F. & Manolova, Tatiana S. & Brush, Candida G., 2017. "Angel Investing: A Literature Review," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 13(4-5), pages 265-439, September.
    27. Ding, Zhujun & Au, Kevin & Chiang, Flora, 2015. "Social trust and angel investors' decisions: A multilevel analysis across nations," Journal of Business Venturing, Elsevier, vol. 30(2), pages 307-321.
    28. Tugba Bas & Yaz Gulnur Muradoglu & Kate Phylaktis, 2022. "Capital Structures of Small Family Firms in Developing Countries," Review of Corporate Finance, now publishers, vol. 2(4), pages 745-790, December.
    29. Douglas Cumming & Minjie Zhang, 2023. "Bankruptcy law and angel investors around the world," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(7), pages 1256-1277, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fernandez, Viviana, 2024. "Micro-angel investments of men and women: The role of institutions," Research in International Business and Finance, Elsevier, vol. 70(PB).
    2. Croce, Annalisa & Schwienbacher, Armin & Ughetto, Elisa, 2023. "Internationalization of business angel investments: The role of investor experience," International Business Review, Elsevier, vol. 32(1).
    3. Harrison, Richard T., 2022. "“Pennies from heaven”? Market failure, circuits of capital and policy support for business angels: The case of cross-border angel investment," Journal of Business Venturing Insights, Elsevier, vol. 17(C).
    4. Butticè, Vincenzo & Croce, Annalisa & Ughetto, Elisa, 2021. "Network dynamics in business angel group investment decisions," Journal of Corporate Finance, Elsevier, vol. 66(C).
    5. Harrison, Richard T. & Bock, Adam J. & Gregson, Geoff, 2020. "Stairway to heaven? rethinking angel investment policy and practice," Journal of Business Venturing Insights, Elsevier, vol. 14(C).
    6. Fernandez, Viviana, 2023. "Family entrepreneurship around the world," International Review of Financial Analysis, Elsevier, vol. 89(C).
    7. Fei Qin & Tomasz Mickiewicz & Saul Estrin, 2022. "Homophily and peer influence in early-stage new venture informal investment," Small Business Economics, Springer, vol. 59(1), pages 93-116, June.
    8. Keith Arundale & Colin Mason, 2025. "Business angel groups as collective action: an examination of the due diligence process," International Entrepreneurship and Management Journal, Springer, vol. 21(1), pages 1-24, December.
    9. Honjo, Yuji & Ikeuchi, Kenta & Nakamura, Hiroki, 2024. "Does risk aversion affect individuals’ interests and actions in angel investing? Empirical evidence from Japan," Japan and the World Economy, Elsevier, vol. 70(C).
    10. Tiago Botelho & Richard Harrison & Colin Mason, 2021. "Business angel exits: a theory of planned behaviour perspective," Small Business Economics, Springer, vol. 57(1), pages 583-602, June.
    11. Mojca Svetek, 2023. "The Role of Entrepreneurs’ Perceived Competence and Cooperativeness in Early-Stage Financing," Entrepreneurship Theory and Practice, , vol. 47(6), pages 2047-2076, November.
    12. Honjo, Yuji & Nakamura, Hiroki, 2020. "The link between entrepreneurship and informal investment: An international comparison," Japan and the World Economy, Elsevier, vol. 54(C).
    13. repec:ers:journl:v:xxiv:y:2021:i:special1:p:1121-1135 is not listed on IDEAS
    14. Marc Cowling & Ross Brown & Neil Lee, 2021. "The geography of business angel investments in the UK: Does local bias (still) matter?," Environment and Planning A, , vol. 53(5), pages 1180-1200, August.
    15. Zhou, Lu Jolly & Zhang, Xinyu & Sha, Yezhou, 2021. "The role of angel investment for technology-based SMEs: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    16. HONJO Yuji & IKEUCHI Kenta & NAKAMURA Hiroki, 2022. "Does risk aversion affect individuals’ actions and interests in angel investing? Empirical evidence from Japan," Discussion papers 22040, Research Institute of Economy, Trade and Industry (RIETI).
    17. De Clercq, Dirk & Meuleman, Miguel & Wright, Mike, 2012. "A cross-country investigation of micro-angel investment activity: The roles of new business opportunities and institutions," International Business Review, Elsevier, vol. 21(2), pages 117-129.
    18. Balcerzak, Adam P. & Zinecker, Marek & Skalický, Roman & Rogalska, Elżbieta & Doubravský, Karel, 2023. "Technology-oriented start-ups and valuation: A novel approach based on specific contract terms," Technological Forecasting and Social Change, Elsevier, vol. 197(C).
    19. Massimo G. Colombo & Benedetta Montanaro & Silvio Vismara, 2023. "What drives the valuation of entrepreneurial ventures? A map to navigate the literature and research directions," Small Business Economics, Springer, vol. 61(1), pages 59-84, June.
    20. Engineer, Merwan H. & Schure, Paul & Vo, Dan H., 2019. "Hide and seek search: Why angels hide and entrepreneurs seek," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 523-540.
    21. Bonini, Stefano & Capizzi, Vincenzo & Valletta, Mario & Zocchi, Paola, 2018. "Angel network affiliation and business angels' investment practices," Journal of Corporate Finance, Elsevier, vol. 50(C), pages 592-608.

    More about this item

    Keywords

    Small family business; Micro-angel investor; Trust; Family capital; Entrepreneurial ecosystem;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:fininn:v:11:y:2025:i:1:d:10.1186_s40854-024-00700-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.