• The procurement of capital is an important consideration for an entity transforming from an entrepreneurial idea to a revenue generating company.

  • Angel financing is one of the most common, but least studied methods, to finance new ventures.

  • The term “Angel Investor” generally refers to a high net-worth individual who typically invests in small, private firms on his or her own account.

  • Using a unique dataset of firms financed by angels between 1994 and 2001, our research provides some insight into the role of angels in funding, monitoring and guiding their investments.

  • Although exposed to greater uncertainty by investing earlier in the life of a firm compared to venture capital investors, angel investors do not rely on traditional control mechanisms such as board control, staging, or contractual provisions to protect against expropriation.

  • Angels may use more informal methods of control such as investing in close geographic proximity and syndicating investments with other angels to mitigate risks.

  • The results of the study indicate that angels have a complementary role to venture capital in the financing of new ventures.

Copyright © 2009 John Wiley & Sons, Ltd.