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Seeding new ventures - green thumbs and fertile fields: individual and environmental drivers of informal investment

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Author Info

  • Laszlo Szerb

    ()
    (University of Pécs, Hungary)

  • Siri Terjesen

    ()
    (Brisbane Graduate School of Business, Australia; Max Planck Institute of Economics, Germany)

  • Gabor Rappai

    ()
    (University of Pécs, Hungary)

Abstract

This study explores individual and country-level environmental drivers of informal "seed" investment. We examine four types of informal investors based on business ownership experience (or no such experience) and close family relationship with investee (or no such relationship): "classic love money", "outsider", "kin owner" and "classic business angel" investors. At the environmental level, we are interested in the role of economic development, income tax policies, start-up costs, pro-enterrise government programmes, availability of debt financing, entrepreneurship education and culture. Using Global Entrepreneurship Monitor data from telephone interiews with 257,793 individuals in 31 countries, including 5,960 informal investors, we report drivers for the four types of seed investment. Descriptive statistics are consistent with prior research: informal investors are likely to be older males who work full-time, earn high incomes, perceive start-up opportunities in the environment, and believe that they have the skills to start their own businesses. At the environmental level, we find that countries with higher percentages of informal investors are significantly likely to have higher levels of economic development, higher business start-up costs, higher levels of entrepreneurship education, lower income taxes and lower power distance. Other environmental effects on the four populations of informal investors are reported and discussed, as well as implications for practice, policy and future research.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-030.

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Date of creation: 02 Jul 2007
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Handle: RePEc:jrp:jrpwrp:2007-030

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Keywords: informal investment; individual drivers; environmental drivers; entrepreneurial careers; business ownership; new venture financing;

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References

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Cited by:
  1. Siri Terjesen & Jolanda Hessels, 2009. "Varieties of export-oriented entrepreneurship in Asia," Asia Pacific Journal of Management, Springer, Springer, vol. 26(3), pages 537-561, September.
  2. André van Stel & Kashifa Suddle & Andrew Burke & Chantal Hartog, 2008. "How does Entrepreneurial Activity Affect the Supply of Business Angels?," Scales Research Reports, EIM Business and Policy Research H200813, EIM Business and Policy Research.
  3. Sander Wennekers & Jolanda Hessels & Chantal Hartog, 2009. "Global Entrepreneurship Monitor 2008 The Netherlands," Scales Research Reports, EIM Business and Policy Research A200914, EIM Business and Policy Research.

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