Promoting Informal Venture Capital: I. Business Introduction Services

Abstract

Interviewees were asked to say what kinds of assistance would have the greatest effect on their investment activity. Their responses are shown in Figure 13.1. It is clear from this information that the biggest impact, in the opinion of investors themselves, comes from helping business angels to identify investment opportunities, along with providing opportunities to co-invest with professional venture capital funds and with other business angels. On the other hand, technical assistance with investment appraisal and valuation, help in preparing the investment agreement and help in managing investments each have little impact on investment activity. This closely corresponds to the response of UK business angels to a similar question (Mason and Harrison, 1997a). In other words, the later in the investment process the less business angels require external assistance. This is quite logical in view of the findings reported in part 1. Most business angels believe that on account of their entrepreneurial background they possess the technical skills required to appraise, value and structure investments. Moreover, on account of their internal locus-of-control beliefs, they will wish to take on the responsibility for these tasks themselves rather than devolving them to someone else. However, in view of the difficulties which business angels encounter in finding suitable investment opportunities they are likely to be responsive to help which enhances their deal flow.