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Angel investors' predictive and control funding criteria: the importance of evolving business models

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journal contribution
posted on 07.12.2017, 09:58 by Jim Crick, David Crick
This study aims to investigate the question involving what factors affect angel investors’ decision-making in funding new start-ups with specific reference to their evolving business models. Without funding and access to networks and experience, certain entrepreneurs will not get their business model through the start-up phase. Design/methodology/approach Data arise from 20 semi-structured interviews with angel investors in New Zealand plus supplementary interviews with business incubator managers and textual data. Findings The findings suggest a degree of causation-based decision-making, in that certain linear thinking was evident. The implication is that, without the ability of the entrepreneurs to convince the investors about key criteria in their decision-making, investment is unlikely. Nevertheless, a degree of effectuation-based decision-making was also evident, the implication being investors having to balance risk/reward decisions in the context of their own perceptions of affordable losses against an evolving business model. However, angel investors may take on co-investment, including from overseas, that takes decision-making away from management teams. Originality/value The study draws attention to the need to consider entrepreneurial ecosystems in angel investor’s decision-making and especially those with a small domestic market that may require management teams to look for scalability internationally. Furthermore, an effectuation lens contributes to knowledge in respect of predictive and control criteria, in particular, assessing risks and rewards against affordable losses involving an evolving business model.

History

School

  • Business and Economics

Department

  • Business

Published in

Journal of Research in Marketing and Entrepreneurship

Volume

20

Issue

1

Pages

34-56

Citation

CRICK, J.M. and CRICK, D., 2017. Angel investors' predictive and control funding criteria: the importance of evolving business models. Journal of Research in Marketing and Entrepreneurship, 20(1), pp. 34-56.

Publisher

Emerald

Version

AM (Accepted Manuscript)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Acceptance date

05/09/2017

Publication date

2018-07-09

Notes

This paper was accepted for publication in the journal Journal of Research in Marketing and Entrepreneurship and the definitive published version is available at https://doi.org/10.1108/JRME-11-2016-0043

ISSN

1471-5201

Language

en

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