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A review of sampling and definitional issues in informal venture capital research

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  • Ellen Farrell
  • Carole Howorth
  • Mike Wright

Abstract

This paper presents the argument for broadening the definition of informal venture capital populations and improving sampling methodologies for informal venture capital research. It is argued that the widely enumerated difficulties regarding sampling methods are driving the definition of a business angel. Sampling difficulties such as unknowable populations limit the ability of researchers to study (survey) business angels. This limitation precipitates narrow definitions of business angels in order to justify the sampling method used. The more narrow definition ultimately results in precluding various cohorts of angels from appearing in the data. This paper reviews a range of studies, their definitions and methodologies, and speculates on the angel cohorts that chosen methodologies may exclude. The paper proposes a protocol that adopts a broad definition of informal venture capital, and a sampling method that produces a more representative range of informal venture capital investors. The method samples from a known population, namely publicly available business registration data, to create a representative sample of business angels. A broad definition and a representative sampling method allow comparisons and generalisable results that current sampling methods preclude. The conclusion highlights that standardised definitions and representative samples will allow studies to make reliable comparisons across types of informal investors, such as family, friends, arch angels and micro-investors.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:veecee:v:10:y:2008:i:4:p:331-353
    DOI: 10.1080/13691060802151986
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    Citations

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    Cited by:

    1. Yaokuang Li & Shuoyuan Jiang & Dan Long & Huidao Tang & Juan Wu, 2014. "An exploratory study of business angels in China: a research note," Venture Capital, Taylor & Francis Journals, vol. 16(1), pages 69-83, January.
    2. Li, Changhong & Shi, Yulin & Wu, Cong & Wu, Zhenyu & Zheng, Li, 2016. "Policies of promoting entrepreneurship and Angel Investment: Evidence from China," Emerging Markets Review, Elsevier, vol. 29(C), pages 154-167.
    3. 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.
    4. Veroniek Collewaert, 2012. "Angel Investors’ and Entrepreneurs’ Intentions to Exit Their Ventures: A Conflict Perspective," Entrepreneurship Theory and Practice, , vol. 36(4), pages 753-779, July.
    5. Lien, Wan-Chien & Chen, Jianhong & Sohl, Jeffrey, 2022. "Do I have a big ego? Angel investors' narcissism and investment behaviors," Journal of Business Venturing, Elsevier, vol. 37(5).
    6. Aurélie Sannajust & Alexander Groh, 2023. "Pioneering management buy-out and entrepreneurial finance research: Mike Wright’s research legacy," Small Business Economics, Springer, vol. 60(1), pages 1-35, January.
    7. 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.
    8. Richard Harrison & William Scheela & P. C. Lai & Sivapalan Vivekarajah, 2018. "Beyond institutional voids and the middle-income trap: The emerging business angel market in Malaysia," Asia Pacific Journal of Management, Springer, vol. 35(4), pages 965-991, December.
    9. Wu Zhenyu & Yuan Wenlong & Wei Xueqi, 2012. "The Effects of New Ventures' Resource Strategies on Angels' Investing Outcomes: Big Gains and Big Losses in Angel Investments," Entrepreneurship Research Journal, De Gruyter, vol. 2(3), pages 1-27, July.
    10. Veroniek Collewaert & Harry J. Sapienza, 2016. "How Does Angel Investor–Entrepreneur Conflict Affect Venture Innovation? It Depends," Entrepreneurship Theory and Practice, , vol. 40(3), pages 573-597, May.
    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.

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