Angel Network Affiliation and Business Angels’ Investment Practices

This paper provides preliminary evidence on the effects of membership in an angel network (BAN) on the investment choices of business angels. Using a novel dataset containing qualitative and quantitative information on 810 angel or angel-group backed investments on 619 companies by 330 unique business angels from 2008 to 2014, we show that BAN membership generates valuable information, networking, monitoring and risk reduction effects, which ultimately affect the amount of personal capital committed by each angel investor and their equity stake in the investee companies. These results extend our knowledge of the investing behavior and characteristics of business angels, a relatively opaque funding source that is rapidly gaining prominence in support of new ventures and the development of the global economy