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Angel Financing and the Performance of High‐Tech Start‐Ups

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  • Annalisa Croce
  • Massimiliano Guerini
  • Elisa Ughetto

Abstract

In this paper, we investigate what drives the performance of high‐tech start‐ups receiving angel financing, while taking a closer look at the capabilities (i.e., experience) and investment behavior of business angels (BAs). We exploit a new data set (extracted from Crunchbase), which consists of 1,933 high‐tech start‐ups that received at least one financing round from a BA. The results indicate that the experience of BAs in early stage investments is positively associated with additional receipt of follow‐on rounds of financing and sequential capital injections from venture capitalists (VCs). Later‐stage experience is positively associated with the start‐up's success (i.e., probability to be listed or acquired), but reduces the need for new VCs to invest in the start‐up. Furthermore, we find consistent evidence that start‐ups that combine BA and VC financing experience higher levels of funding amounts, additional VC financing, and an improved likelihood of success. Finally, we find that the co‐localization of BA investors and start‐ups in the same area facilitates the attraction of VC financing.

Suggested Citation

  • Annalisa Croce & Massimiliano Guerini & Elisa Ughetto, 2018. "Angel Financing and the Performance of High‐Tech Start‐Ups," Journal of Small Business Management, Taylor & Francis Journals, vol. 56(2), pages 208-228, April.
    • Handle: RePEc:taf:ujbmxx:v:56:y:2018:i:2:p:208-228
    DOI: 10.1111/jsbm.12250
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    Cited by:

    1. Bonnet, Christophe & Capizzi, Vincenzo & Cohen, Laurence & Petit, Aurelien & Wirtz, Peter, 2022. "What drives the active involvement in business angel groups? The role of angels' decision-making style, investment-specific human capital and motivations," Journal of Corporate Finance, Elsevier, vol. 77(C).
    2. Spanò, Rosanna & Massaro, Maurizio & Iacuzzi, Silvia, 2023. "Blockchain for value creation in the healthcare sector," Technovation, Elsevier, vol. 120(C).

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