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There must be an angel? Local financial markets, business angels and the financing of innovative start-ups

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  • Luca Grilli

Abstract

This study addresses the question of whether business angels can fill the gap left by venture capitalists and banks in the financing of innovative start-ups in regions where there is a relatively thin financial supply of bank loans and venture capital investments. The empirical analysis, based on approximately 2000 Italian ventures, highlights the fact that innovative start-ups located in weak local financial ecosystems show a relatively low probability of getting business angel financing. In these areas, angel investing is unlikely to represent a viable and effective informal solution to alleviate regional financing gaps towards innovative start-ups left by more institutionalized financial intermediaries.

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  • Luca Grilli, 2019. "There must be an angel? Local financial markets, business angels and the financing of innovative start-ups," Regional Studies, Taylor & Francis Journals, vol. 53(5), pages 620-629, May.
    • Handle: RePEc:taf:regstd:v:53:y:2019:i:5:p:620-629
    DOI: 10.1080/00343404.2018.1479524
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    Cited by:

    1. Honjo, Yuji, 2021. "The impact of founders’ human capital on initial capital structure: Evidence from Japan," Technovation, Elsevier, vol. 100(C).
    2. Marek Zinecker & Martina Skalicka & Adam P. Balcerzak & Michał Bernard Pietrzak, 2022. "Identifying the impact of external environment on business angel activity," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 83-105, December.
    3. Elisa Ughetto & Marc Cowling & Neil Lee, 2019. "Regional and spatial issues in the financing of small and medium-sized enterprises and new ventures," Regional Studies, Taylor & Francis Journals, vol. 53(5), pages 617-619, May.
    4. Grilli, Luca & Marzano, Riccardo, 2023. "Bridges over troubled water: Incubators and start-ups’ alliances," Technovation, Elsevier, vol. 121(C).
    5. Martin Andersson & Johan E. Eklund & Alexandra Tsvetkova, 2023. "Spatial variations in financial constraints of SMEs—evidence from firm-level estimates of investment-cash flow sensitivities in Sweden," Small Business Economics, Springer, vol. 60(4), pages 1683-1698, April.
    6. Ghinami, Francesca & Montresor, Sandro, 2023. "Tangible and intangible proximities in the access to Venture Capital: evidence from Italian innovative start-ups," SocArXiv hqrj7, Center for Open Science.
    7. 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).
    8. 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.
    9. 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).

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