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Executive forum: Seven ways to stimulate business angels' investments

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  • Rudy Aernoudt

Abstract

Government policy to stimulate growth, innovation and especially the creation of new enterprises is rather focused on access to finance mainly through increasing the supply of capital. As formal venture capitalists are moving towards larger deals and shifting their investments to a later stage of development, creating a ‘second’ equity gap, business angels become more important in the financing of seed, early stage and second round phases. Government policy to stimulate financing should hence be considered as a priority. However, policies have to be focused both on the supply side and the demand side and combined with a cultural change. Government should look at innovative ways to stimulate business angel financing rather than coping with market failures by bureaucratic subsidy schemes. The paper identifies seven ways to stimulate business angel investment. Coping with the second equity gap can mainly happen by stimulating syndication and by setting up co-investment schemes. Investor readiness, corporate orientation, business angel networks, business angel academies and the integrated finance concept can be considered as key concepts in coping with the information asymmetry problem.

Suggested Citation

  • Rudy Aernoudt, 2005. "Executive forum: Seven ways to stimulate business angels' investments," Venture Capital, Taylor & Francis Journals, vol. 7(4), pages 359-371, March.
    • Handle: RePEc:taf:veecee:v:7:y:2005:i:4:p:359-371
    DOI: 10.1080/13691060500120853
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    Citations

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    Cited by:

    1. Becsky-Nagy Patricia, 2013. "Venture Capital In Hungarian Academic Spin-Offs," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 351-360, December.
    2. Cowling, Marc & Ughetto, Elisa & Lee, Neil, 2018. "The innovation debt penalty: Cost of debt, loan default, and the effects of a public loan guarantee on high-tech firms," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 166-176.
    3. Christophe Bonnet & Laurence Cohen & Peter Wirtz, 2015. "Angel Cognition and Active Involvement in BAN Governance and Management," Working Papers hal-01182804, HAL.
    4. 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).
    5. Arkadiusz Świadek & Jadwiga Gorączkowska & Karolina Godzisz, 2022. "Conditions Driving Eco-Innovation in a Catching-Up Country—ICT vs. Industry in Poland," Energies, MDPI, vol. 15(15), pages 1-21, July.
    6. Andrea Bellucci & Gianluca Gucciardi & Rossella Locatelli & Cristiana Schena, 2022. "Gender Gap in Business Angel financing," Mo.Fi.R. Working Papers 175, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    7. Peter Wirtz & Christophe Bonnet & Laurence Cohen & Christophe Haon, 2020. "Investing Human Capital: Angel Cognition and Active Involvement in Business Angel Groups," Grenoble Ecole de Management (Post-Print) halshs-02374570, HAL.
    8. Miskiewicz, Radoslaw, 2017. "Organisational structure in the progress of integration," MPRA Paper 81767, University Library of Munich, Germany, revised 2017.

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