Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 248: The Economic Significance of Business Angels - Towards Comparable Indicators

Sofia Avdeitchikova () and Hans Landström
Additional contact information
Sofia Avdeitchikova: The Ratio institute, Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
Hans Landström: Lund University, Postal: Lund universty

Abstract: Due to their importance for fostering high-growth entrepreneurship, business angels have over the last decades attracted considerable interest among policy-makers around the world. However, most of the policy initiatives to support business angel investing have been made without any strong empirical basis to guide them. Thus, the research results so far have done little to inform policy-makers regarding – what is the state of business angel market and what (if any) policy action is required? In this paper, we take one step in the direction of “making sense” of the existing evidence. We make a differentiation between the scope of the business angel investing and the significance of business angel investing and relate the recent empirical estimates of the business angel activity to the supply of venture finance on the one hand and the demand for venture finance on the other. In this respect, we move beyond talking about the scope of the business angel market and discuss the importance or potential impact of this source of finance for new and growing ventures.

Keywords: business angels; entrepreneurship policy; indicators; supply-side; demand-side.

JEL-codes: G18; M13; M20; O16

24 pages, December 31, 2014

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