Abstract
Business angels enjoy a strong reputation for being more efficient than other investors among policy makers, practitioners, and scholars. However, due to the limited availability of specific financial data, previous research has barely assessed the impact of angels on companies’ performance. This paper seeks to bridge this gap by providing evidence from a unique dataset made up of 432 angel-backed French companies which are compared to two control groups, one randomly selected and another one consisting of similar enterprises. This double comparison process enables us to purge our analysis of structural effect and to demonstrate the importance of the methodology in generating the sample. Indeed, the results we obtain significantly differ depending on the control group. Our results show that the positive influence of angels depends on the condition of the comparison. The set of BA-backed companies is more likely to exhibit superior performance when it is compared to a random sample whereas the companies’ performance is either identical or worse when it is compared to a sample composed of k-nearest neighbors. In addition, using a quantile regression technique makes it possible to differentiate the effect of business angels based on the distribution of the value of the growth rate.
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Notes
The Resource online 1 presents some key figures of the different European markets.
Nadine Levratto and Luc Tessier are accreditated by the Statistical Confidentiality Committee (Comité du Secret Statistique), the French body that supervises access to data, for using the databases under strict confidentiality agreements. They are the only authors authorized to access the data.
It is named FARE (Fichier Approché de Résultats d’Entreprises).
We thank the members of France Angels for their support to this project and their willingness to share their data.
This subset has been composed using a SAS « CAHQUAL » procedure made available by the INSEE (1994). For a more detailed presentation of the SAS procedure used to compose this reference group, refer to online resource 3.
We adopted the second level of the Nomenclature of Units for Territorial Statistics (NUTS).
To define the industries, we adopt the French Classification system which is strictly equivalent to the European standard classification of productive economic activities (NACE). We took the second level, which consists of headings identified by a two-digit numerical code (divisions).
Small initial size means that large relative growth is easier to achieve with quite small absolute growth, whereas large initial size demands large absolute growth to achieve high relative growth.
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This research was partially supported by the network France Angels which provided us a list of companies backed by business angels. We thank the members of the expert committee who provided insight and expertise that greatly assisted the research, as well as the participants of the Research Network on Innovation, 2014, who gave us valuable suggestions on an earlier version of this paper. We thank the anonymous reviewers for their valuable comments that greatly improved the manuscript. All the opinions expressed are those of the authors and not those of the France Angels. The usual disclaimers apply.
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Appendices
Appendix 1—Correlation matrices
Appendix 2—Detailed results of the estimations
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Levratto, N., Tessier, L. & Fonrouge, C. Business performance and angels presence: a fresh look from France 2008–2011. Small Bus Econ 50, 339–356 (2018). https://doi.org/10.1007/s11187-016-9827-5
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DOI: https://doi.org/10.1007/s11187-016-9827-5