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Business angel networks: a review and assessment of their value to entrepreneurship

In: Handbook of Research on Business Angels

Author

Listed:
  • Tom Lahti
  • Henrik Keinonen

Abstract

The chapter focuses on an initiative that has become popular among policy-makers around the world in order to foster business angel activities, namely, business angel networks (BANs). BANs have been established to increase the transparency and improve the efficiency of the business angel market by providing a channel of communication that enables entrepreneurs seeking finance to come into contact with business angels, and at the same time enable business angels to receive information on investment opportunities without the need to compromise their anonymity if so desired. The authors describe the development of BAN activities in different countries and evaluate their benefits and drawbacks. The chapter identifies different kinds of BANs and the different ways that BANs can provide their deal-brokering service and deliver supplementary functions such as training of entrepreneurs and business angels, advisory service, contract templates and the development of good practice. Evaluations of BANs have shown both positive impacts on investment activity as well as negative effects, hence there is no conclusive answer to whether there is a need for public sector interventions to support the establishment and operation of BANs.

Suggested Citation

  • Tom Lahti & Henrik Keinonen, 2016. "Business angel networks: a review and assessment of their value to entrepreneurship," Chapters, in: Hans Landström & Colin Mason (ed.), Handbook of Research on Business Angels, chapter 14, pages 354-378, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:15634_14
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    Citations

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    Cited by:

    1. Bonini, Stefano & Capizzi, Vincenzo & Zocchi, Paola, 2019. "The performance of angel-backed companies," Journal of Banking & Finance, Elsevier, vol. 100(C), pages 328-345.
    2. Julien Salin & Nadine Levratto, 2020. "Are business angel-backed companies truly different? a comparative analysis of the financial structure," EconomiX Working Papers 2020-5, University of Paris Nanterre, EconomiX.
    3. 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).
    4. 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.
    5. 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).

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