Informal investors and value added: what do we know and where do we go?

Informal investors have been highlighted as important stakeholders for potential highgrowth ventures. Extant empirical research provides evidence that they contribute not only with money but also bring added value in terms of providing their skills and experience to support the continued development and growth of the ventures in which they have invested. However, despite the reported benefits of the value added provided by informal investors there are very few studies that explicitly address the issue of informal investors and value added. The present paper seeks to meet this shortcoming by presenting a review of state-of-the-art literature and research on informal venture capital and value added. The objective is to summarize what we know as a basis for where research should go in the future. The literature review identifies four main core functions provided by informal investors. The identification of different core functions is then used to guide future studies of informal investors and value added. The paper ends with a concluding summary.