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Informal Investors and the Informal Venture Capital Market in Ireland

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Author Info

  • Vanessa Diaz-Moriana

    ()
    (DCU Business School, Dublin City University, Dublin 9, Ireland.)

  • Colm O’Gorman

    ()
    (DCU Business School, Dublin City University, Dublin 9, Ireland.)

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    Abstract

    While it is widely recognised that informal investors play a vital role in the development of new businesses, extent research on the nature of informal investment activity has focussed on large economies. There is little research about informal investment in small economies, including Ireland. This paper uses data from the Global Entrepreneurship Monitor to outline the extent and nature of informal venture capital activity in Ireland and to provide an estimate of the size of the informal venture capital market in Ireland. Results suggest that Family, Friends and Colleagues provided at least €195 million to new businesses in 2011, and Business Angels invested €80 million. We find that for every €1 of formal venture capital funding, there is approximately €5 of informal capital funds. We conclude by highlighting implications for policy and practice.

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    Bibliographic Info

    Article provided by Asian Economic and Social Society in its journal Journal of Asian Scientific Research.

    Volume (Year): 3 (2013)
    Issue (Month): 6 (June)
    Pages: 630-643

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    Handle: RePEc:asi:joasrj:2013:p:630-643

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    Related research

    Keywords: Informal venture capital; informal investors; business angels; Ireland;

    References

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    1. Jonathan Levie & Erkko Autio, 2008. "A theoretical grounding and test of the GEM model," Global Entrepreneurship Monitor Working Paper Series 1102, Global Entrepreneurship Research Association, revised Jul 2008.
    2. Yuen-Ping Ho & Poh-Kam Wong, 2007. "Financing, Regulatory Costs and Entrepreneurial Propensity," Small Business Economics, Springer, vol. 28(2), pages 187-204, March.
    3. Haar, Nancy E. & Starr, Jennifer & MacMillan, Ian C., 1988. "Informal risk capital investors: Investment patterns on the East Coast of the U.S.A," Journal of Business Venturing, Elsevier, vol. 3(1), pages 11-29.
    4. Dylan Jones-Evans & Piers Thompson, 2008. "The Spatial Dispersion of Informal Investment at a Regional Level: Evidence from the UK," European Planning Studies, Taylor & Francis Journals, vol. 17(5), pages 659-675, May.
    5. Poh Kam Wong & Yuen Ping Ho, 2006. "Characteristics and determinants of informal investment in Singapore," Venture Capital, Taylor & Francis Journals, vol. 9(1), pages 43-70, June.
    6. Aram, John D., 1989. "Attitudes and behaviors of informal investors toward early-stage investments, technology-based ventures, and coinvestors," Journal of Business Venturing, Elsevier, vol. 4(5), pages 333-347, September.
    7. Colm O'Gorman & Siri Terjesen, 2005. "Financing the Celtic Tigress: Venture financing and informal investment in Ireland," Venture Capital, Taylor & Francis Journals, vol. 8(1), pages 69-88, September.
    8. Jonathan Levie & Erkko Autio, 2008. "A theoretical grounding and test of the GEM model," Small Business Economics, Springer, vol. 31(3), pages 235-263, October.
    9. Markku Maula & Erkko Autio & Pia Arenius, 2005. "What Drives Micro-Angel Investments?," Small Business Economics, Springer, vol. 25(5), pages 459-475, December.
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