Determinants that Impact the Investment Decision of Angel Investors on Startups

2020 ◽  
Vol 36 (4) ◽  
Author(s):  
Dang Thanh Dat ◽  
Nguyen Thi Kim Anh
Keyword(s):  
Southeast Asia ◽  
Capacity Building ◽  
Early Stage ◽  
Investment Decision ◽  
Management Knowledge ◽  
Building Management ◽  
Angel Investment ◽  
Angel Investors

Angel investment is important for startups when they are in between the seed-stage and the early-stage because they need funds to grow rapidly. Angel investors, in addition to providing capital, normally function as strategic partners who provide capacity building, management knowledge and mentorship for startups. Angel investors accordingly benefit startups in many different ways, including the provision of funds. Vietnam is ranked third in Southeast Asia in terms of the number of active startups, most of which are in an early stage and therefore in need of funds from angel investors. The paper examines the concept of angel investment and the determinants that impact angel investors’ decisions. The paper then recommends implications so as to help build a mechanism to develop domestic angel investment activities and attract foreign angel investment into Vietnam.

Zoomvesting: angel investors' perception of subjective cues in online pitching

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nicole Kuhn ◽  
Gilberto Sarfati
Keyword(s):  
Cultural Context ◽  
Eye Gaze ◽  
Investment Decision ◽  
Body Movement ◽  
Body Language ◽  
Message Content ◽  
Content Type ◽  
Tone Of Voice ◽  
Angel Investment ◽  
Angel Investors

Purpose The COVID-19 pandemic transformed angel investment meetings from in-person to online. The purpose of this paper is to explore whether this move affected angel investors' perception of subjective behavioral cues in pitch sessions within a large Brazilian angel group. Design/methodology/approach This study followed an exploratory approach using a triangulation process that combined observation, documents and interviews. Data collected by observation, document studies, and interviews were themed, coded, and organized during the research. Findings The move from in-person to online pitches did not seem to affect levels of trustworthiness or arrogance as angels assessed more message content during Q&A sessions. Body movement, gestures and “eye gaze” (i.e. the look on a presenter’s face) played a central role in passion assessment during in-person meetings. Body language was highly limited during online sessions and tone of voice became the main source of passion assessment. Research limitations/implications The findings of this study suggest that pitches at online meetings affect angel investors' perception of founders' subjective cues, particularly cues pertaining to passion. Entrepreneurs should be trained to convey passion with tone of voice and to improve their body language in the context of webcam use. The interviews with volunteer sampling were subject to volunteer bias. Additionally, the findings may be affected by cultural context. Practical implications A practical contribution of this study is to highlight the need for entrepreneurs to be trained for online pitches. In an online setting, body language is limited, but it is still possible to use one’s hands and tone of voice to connect better to investors. Originality/value This study is unique because it captures the transition of angel investment meetings from in-person affairs before the pandemic to online meetings during the pandemic crisis. These unique circumstances provided a real-world laboratory to observe founders' subjective cue effects on angel investment decision-making.

scholarly journals Policies to Promote Angel Investment in Startups in Some Countries in Southeast Asia

2021 ◽  
Vol 37 (1) ◽  
Author(s):  
Nguyen Thi Kim Anh ◽  
Dang Thanh Dat
Keyword(s):  
Southeast Asia ◽  
International Experience ◽  
Research Report ◽  
Business Angels ◽  
Tax Incentive ◽  
Angel Investor ◽  
Angel Investing ◽  
Angel Investment ◽  
Tax Deduction ◽  
Angel Investors

 Angel investor plays an important role in the startup ecosystem, and is a factor that fills the capital gap for startups and also brings many benefits to startups when they can accompany and support expertise, management and consulting for startups. In the early stage of establishment and development of the startup ecosystem, the role of governments was important in issuing policies and providing solutions to promote angel investment. For Vietnam, encouraging angel investors to invest in startups is an important policy in developing the startup ecosystem. With research on policies to promote angel investment in startups in some countries in Southeast Asia including: Singapore, Thailand and Malaysia, the article summarizes some experiences to promote angel investment in startups in Vietnam. Keyword: Angel investor, startup. References [1] Investopedia, Angel Investor, https://investopedia.com/terms/a/angelinvestor.as, 2020 (accessed on 03/9/2020).[2] Startup SG, Overview Singapore’s Startup Ecosystem, https://www.startupsg.gov.sg/, 2020 (accessed on 03/9/2020).[3] WTO and International Trade Center - VCCI, research report: Mechanism to support Innovative Startups: International Experience – Proposed solutions for Vietnam, https://wtocenter.vn/an-pham/13265-study-mechanism-to-support-innovative-startups-international-experience---proposed-solutions-for-vietnam, 2017 (accessed on 03/9/2020).[4] Kam, W.P. Overview of angel investing in Singapore, Tech in Asia, https://www.techinasia.com/overview-of-angel-investing-in-singapore/, 2011 (accessed on 03/9/2020).[5] Enterprise Singapore, SEEDS Capital - Enterprise Singapore, https://www.enterprisesg.gov.sg/financial-assistance/investments/investments/seeds-capital/overview, 2020 (accessed on 03/9/2020).[6] Guide Me Singapore, Singapore Tax Deduction Scheme for Angel Investors, https://www.guidemesingapore.com/business-guides/taxation-and-accounting/personal-tax/tax-deduction-scheme-for-angel-investors, 2020 (accessed on 03/9/2020).[7] Startup Angels, Bangkok Startup Angels, https://startupangels.com/market/bangkok/, 2017 (accessed on 03/9/2020).[8] Embassy of the Kingdom of the Netherlands in Bangkok, Startup Ecosystem Thailand, www.nederlandenu.nl›startup-thailand-factsheet, 2019 (accessed on 03/9/2020).[9] DFDL, Thailand Tax Update: New Tax Incentives for Angel Investors, Jonathan Blaine, https://www.dfdl.com/resources/legal-and-tax-updates/thailand-tax-update-tax-incentive-for-angel-investor/, 2018 (accessed on 03/9/2020).[10] Ajagbe Akintunde Musibau, Ismail Kamariah, The Financing of Early Staged Technology Based Firms in Malaysia, Middle-East Journal of Scientific Research (2013) 18 (5): 697-707, DOI: 10.5829/idosi.mejsr.2013.18.5.11747[11] Malaysian Business Angels Network, 2018 Annual Report, https://mban.com.my/wp-content/uploads/ 2019/05/Annual-Report.pdf, 2019 (accessed on 03/9/2020).[12] Malaysian Business Angels Network, Angel Tax Incentive, https://mban.com.my/angel-tax-incentive/, 2020 (accessed on 03/9/2020).[13] Malaysia Business Angel Network, Angel Investor Application Explanatory Notes and Guidance Note, https://mban.com.my/wp-content/uploads/2017/04/Angel-Application_ Explanatory-Notes.pdf, 2017 (accessed on 03/9/2020).    

scholarly journals Lost in translation: increasing engagement between angel investors and immigrant startups in the Canadian entrepreneurial ecosystem

2021 ◽  
Author(s):  
Erina Shirai
Keyword(s):  
Decision Making ◽  
Early Stage ◽  
Investment Decision ◽  
Immigrant Community ◽  
Entrepreneurial Ecosystem ◽  
Track Record ◽  
Immigrant Entrepreneurs ◽  
Investment Decision Making ◽  
Job Opportunities ◽  
Angel Investors

Immigrant entrepreneurs are an important and growing segment of Canada’s startup scene. They contribute to the Canadian economy and lower unemployment rates by creating job opportunities through their ventures. However, they face a challenge in receiving funding from local investors in the initial stages of their startup. Angel investors are experienced professionals with an extensive network in the entrepreneurial ecosystem who specialize in early stage funding. Increasing engagement between Angels and immigrant entrepreneurs can create greater opportunities for the immigrant community in Canada and help Angels diversify their portfolio. The objective of this research is to adapt the Investment Decision Making Criteria for Angels (IDMCA) to analyze the factors that influence an Angel’s decision making process, and determine whether these factors are moderated by an entrepreneur’s immigrant status. Results from the study have shown that the Passion & Commitment (P&C), Integrity & Trust (I&T), and Open-mind & Adaptability (O&A) are important factors for an Angel’s decision making in respect to immigrant startups, whereas Industry Experience (IE), Track Record (TR), and Technology Knowledge (TK) are not important factors.

Gender stereotypes in the angel investment process

2018 ◽  
Vol 10 (2) ◽  
pp. 134-157 ◽  
Author(s):  
Linda F. Edelman ◽  
Róisín Donnelly ◽  
Tatiana Manolova ◽  
Candida G. Brush
Keyword(s):  
Social Identity ◽  
Gender Stereotypes ◽  
Women Entrepreneurs ◽  
Early Stage ◽  
Entrepreneurial Ventures ◽  
Content Type ◽  
Angel Investing ◽  
Angel Investment ◽  
Investment Process ◽  
Angel Investors

Purpose Women-led companies receive less than 5 per cent of early-stage equity investment. This paper aims to explore the disparity in equity funding between men- and women-led companies, using a social identity perspective, complemented by insights from signaling theory. We argue that in the angel group context, which is male-dominated, gender stereotypes may bias angels’ interpretation of the signals sent by entrepreneurs, so that entrepreneurial ventures led by men are more favorably evaluated, thus excluding women entrepreneurs from funding. The ideas are tested on a sample of 358 entrepreneurs who applied for funding from a northeast US angel group using perceptual data from both sides of the investment dyad. Findings suggest that angel investors view women-led entrepreneurial ventures as having less legitimacy, even though we see no difference in actual legitimacy across ventures. Design/methodology/approach The ideas are tested on a sample of 358 entrepreneurs who applied for funding from a northeast angel group using perceptual data from both sides of the investment dyad. Findings The findings suggest that, in the context of angel investing, there is a subtle bias that follows from the perceived stereotype between being female and the ability to lead a legitimate new venture. Thus, this study tests the tenets of the social identity theory by finding that mostly male angel investors act in accordance to their gender prescribed roles when they evaluate businesses presented by women entrepreneurs providing some evidence of “in-group” and “out-group” effects and stereotypes. Research limitations/implications The findings continue the conversation about biases toward women in early-stage financing by using a social identity lens to look at the way in which adopted identities lead to particular outcomes and stereotypes. The authors have used the context of angel investing to test these ideas, finding some support for their contention that gender is pivotal when angels are making investment decisions. For researchers, this study suggests that gender should not be used solely as a control variable, but instead should be the focus of the inquiry itself. Practical implications For practitioners, this study reminds women seeking angel investment that they are not playing on a level field and so they should do all that they can to enhance the legitimacy of themselves and their ventures. Originality/value The authors contend that within an angel group that is composed of predominantly men, role stereotypes of entrepreneurs as masculine will be expected, therefore creating gender biases against women. The authors expect these biases, whether conscious or unconscious, will lead the angel investors to evaluate men entrepreneurs more favorably than women entrepreneurs as they move through the angel investment process. Therefore, for women entrepreneurs in the early stages of investment funding, the authors posit that the dearth of funding is a function of gender identity stereotypes which may be manifested in hidden and often unconscious biases on the part of the angel investor.

scholarly journals Lost in translation: increasing engagement between angel investors and immigrant startups in the Canadian entrepreneurial ecosystem

2021 ◽  
Author(s):  
Erina Shirai
Keyword(s):  
Decision Making ◽  
Early Stage ◽  
Investment Decision ◽  
Immigrant Community ◽  
Entrepreneurial Ecosystem ◽  
Track Record ◽  
Immigrant Entrepreneurs ◽  
Investment Decision Making ◽  
Job Opportunities ◽  
Angel Investors

Immigrant entrepreneurs are an important and growing segment of Canada’s startup scene. They contribute to the Canadian economy and lower unemployment rates by creating job opportunities through their ventures. However, they face a challenge in receiving funding from local investors in the initial stages of their startup. Angel investors are experienced professionals with an extensive network in the entrepreneurial ecosystem who specialize in early stage funding. Increasing engagement between Angels and immigrant entrepreneurs can create greater opportunities for the immigrant community in Canada and help Angels diversify their portfolio. The objective of this research is to adapt the Investment Decision Making Criteria for Angels (IDMCA) to analyze the factors that influence an Angel’s decision making process, and determine whether these factors are moderated by an entrepreneur’s immigrant status. Results from the study have shown that the Passion & Commitment (P&C), Integrity & Trust (I&T), and Open-mind & Adaptability (O&A) are important factors for an Angel’s decision making in respect to immigrant startups, whereas Industry Experience (IE), Track Record (TR), and Technology Knowledge (TK) are not important factors.

The angel investment decision: insights from Australian business angels

2018 ◽  
Vol 60 (3) ◽  
pp. 3133-3162
Author(s):  
Brett Anthony White ◽  
John Dumay
Keyword(s):  
Investment Decision ◽  
Business Angels ◽  
Angel Investment

scholarly journals It’s a Peoples Game, Isn’t It?! A Comparison Between the Investment Returns of Business Angels and Machine Learning Algorithms

2020 ◽  
pp. 104225872094520
Author(s):  
Ivo Blohm ◽  
Torben Antretter ◽  
Charlotta Sirén ◽  
Dietmar Grichnik ◽  
Joakim Wincent
Keyword(s):  
Machine Learning ◽  
Cognitive Biases ◽  
Early Stage ◽  
Investment Decisions ◽  
Machine Learning Algorithms ◽  
Behavioral Decision Theory ◽  
Business Angels ◽  
Cognitive Limitations ◽  
Investment Returns ◽  
Angel Investment

Investors increasingly use machine learning (ML) algorithms to support their early stage investment decisions. However, it remains unclear if algorithms can make better investment decisions and if so, why. Building on behavioral decision theory, our study compares the investment returns of an algorithm with those of 255 business angels (BAs) investing via an angel investment platform. We explore the influence of human biases and experience on BAs’ returns and find that investors only outperformed the algorithm when they had extensive investment experience and managed to suppress their cognitive biases. These results offer novel insights into the role of cognitive limitations, experience, and the use of algorithms in early stage investing.

Mechanism of FMD Outbreaks and its Control in Asian Region

2012 ◽  
Vol 7 (3) ◽  
pp. 258-263 ◽  
Author(s):  
Kenichi Sakamoto ◽  
Keyword(s):  
Southeast Asia ◽  
Large Scale ◽  
Early Stage ◽  
Foot And Mouth Disease ◽  
Antiviral Agent ◽  
Economic Damage ◽  
Fmdv Infection ◽  
Asian Region ◽  
Serotype O ◽  
Virus Excretion

Foot-and-mouth disease (FMD) outbreaks by serotype O are dominant in Asia. Topotypes fall mostly into two groups – Southeast Asia (SEA) and Middle East-South Asia (ME-SA). FMD viruses of the SEA topotype (Mya-98 lineage) recently spread widely in Southeast Asia and East Asia. Economic damage by FMD outbreaks in Japan and Korea were very severe in 2010-2011. FMD outbreaks by serotype A are sporadically observed in the region. Serotype Asia 1 newly appeared in Pakistan from 2010 and Bahrain and Iran in 2011. Neighboring countries should take note that there is no matching vaccine available for Asia 1 at this moment. Preparing good matching vaccines is very important for controlling the disease in the Asian region. There are several good matching vaccines for the recent FMD outbreaks by type O (SEA topotype) and type A (Asia topotype). In some cases, however, such as recent outbreaks due to Asia 1 and SEA topotypes, no such matching vaccines are currently available. Officials in countries the region should therefore be aware that a good matching vaccine is not always available and without a good vaccine candidate, early detection and eradication of the disease are critical points in such cases as FMD. In addition, control tools that are different from FMD vaccine are required to prevent pandemic outbreaks and economic catastrophes. Since it takes 7 to 10 days for pigs to produce enough antibodies against FMD virus (FMDV) infection through vaccination, infected pigs continue to excrete a large amount of FMDV in the early stage of infection after emergency vaccination. It is often observed that FMD outbreaks in pigs become large-scale outbreaks and sometimes inflict serious economic damage. It is therefore desired to develop new prompt tools to inhibit FMDV infection or virus excretion from pigs. Antiviral agent exhibit much more prompt and faster effectiveness than vaccine in inhibiting virus excretion from infected animals. In order to inhibit FMDV excretion from infected pigs, which are called amplifiers in FMD, an antiviral agent, T-1105, an pyrazine carboxamide derivative, was developed as a novel tool expected to show prompt efficacy in controlling FMD in pigs.

INITIAL PUBLIC OFFERINGS AND PRE-IPO SHAREHOLDERS: ANGELS VERSUS VENTURE CAPITALISTS

2012 ◽  
Vol 17 (04) ◽  
pp. 1250022 ◽  
Author(s):  
WILLIAM C. JOHNSON ◽  
JEFFREY E. SOHL
Keyword(s):  
Initial Public Offerings ◽  
Initial Public Offering ◽  
Early Stage ◽  
Equity Capital ◽  
Venture Capitalists ◽  
Public Offerings ◽  
Corporate Investors ◽  
Public Offering ◽  
Angel Investors

At the time of an initial public offering, shares in a firm are typically held by venture capitalists, insiders, corporate investors and angel investors. We examine the role of angel investors in the IPO process. We find that angel investors provide equity capital in industries venture capitalists are less likely to serve and that shareholders in angel backed IPO firms are more likely to sell their shares at the time of the offering. Where venture capital backed IPO firms have higher underpricing, angel backed IPO firms do not, implying that angels may be the preferred investors for early-stage firms.

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