Why business angels reject investment opportunities: is it personal?

Mason, C. , Botelho, T. and Zygmunt, J. (2017) Why business angels reject investment opportunities: is it personal? International Small Business Journal, 35(5), pp. 519-534. (doi: 10.1177/0266242616646622)

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A major focus of research on business angels has examined their decision-making processes and investment criteria. As business angels reject most of the opportunities that they receive, this article explores the reasons informing such decisions. In view of angel heterogeneity, investment opportunities might be expected to be rejected for differing reasons. Two sources of data are used to examine this issue. Face-to-face interviews with 30 business angels in Scotland and Northern Ireland provided information on typical ‘deal killers’ This was complemented by an internet survey of UK that attracted responses from 238 UK business angels. The findings confirm that the main reason for rejection relates to the entrepreneur/management team. However, angel characteristics do not explain the number of reasons given for opportunity rejection nor do they predict the reasons for rejecting investment opportunities. This could be related to the increasing trend for business angels to join organized groups which, in turn, leads to the development of a shared repertoire of investment approaches. We suggest the concept of ‘communities-of-practice’ as an explanation for this finding.

Item Type:Articles
Additional Information:The interview survey was funded by the ESRC under its Co-Funded Pilot scheme. The co-funders are NESTA, BVCA, Lloyds-TSB and Invest NI. The internet survey was undertaken during a University of Glasgow PhD scholarship.
Keywords:Entrepreneurial finance, business angels, angel characteristics, investment decision, rejection.
Glasgow Author(s) Enlighten ID:Mason, Professor Colin
Authors: Mason, C., Botelho, T., and Zygmunt, J.
College/School:College of Social Sciences > Adam Smith Business School > Management
Journal Name:International Small Business Journal
Publisher:SAGE Publications
ISSN (Online):1741-2870
Published Online:03 June 2016
Copyright Holders:Copyright © 2016 The Authors
First Published:First published in International Small Business Journal 35(5): 519-534
Publisher Policy:Reproduced in accordance with the publisher copyright policy

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