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The Role of Business Angels in the Early-Stage Financing of Startups: A Systematic Literature Review

Author

Listed:
  • Jürgen Lange

    (Digital Office 24 GmbH, Bethmannstraße 8, 60311 Frankfurt am Main, Germany)

  • Stefan Rezepa

    (Apotheke am Mehringplatz, Mehringplatz 12, 10969 Berlin, Germany)

  • Monika Zatrochová

    (Institute of Management, Department of Management of Chemical and Food Technologies, Slovak University of Technology in Bratislava, Vazovova 5, 812 43 Bratislava, Slovakia)

Abstract

Funding is an essential factor for the viability and growth of startups. As a result, business angels play a crucial role in providing financial support to these business companies, particularly those that are innovative and have significant potential for growth. This study sought to determine the role business angels play in the early-stage financing of startups. Specifically, the study looked at the value-added services provided by business angels, business angel funding impact on startup survival rates, the effectiveness of business angel networks’ impact on facilitating startup funding, and business angels’ contribution to the development of entrepreneurial ecosystems beyond financial investment for startups. This study adopted a systematic literature review methodology, employing key theoretical methods such as analysis, synthesis, comparison, and induction to assess the role business angels play in the early-stage financing of startups. The findings show that business angels’ expertise, networks, and mentorship emerge as critical value-added startup services. Similarly, it was found that business angel funding positively influences startup survival; however, other factors also influence this impact. Moreover, the results show that business angel networks play a significant role in facilitating startup funding. Furthermore, beyond financial investment for startups, it was found that business angels contribute significantly to the development of entrepreneurial ecosystems, including prioritizing the contributions of ecosystem builders in startup screening, access to mentoring, and entrepreneurial education. The study concluded that business angels play a positive role in the early-stage financing of startups.

Suggested Citation

  • Jürgen Lange & Stefan Rezepa & Monika Zatrochová, 2024. "The Role of Business Angels in the Early-Stage Financing of Startups: A Systematic Literature Review," Administrative Sciences, MDPI, vol. 14(10), pages 1-21, October.
    • Handle: RePEc:gam:jadmsc:v:14:y:2024:i:10:p:247-:d:1492365
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    References listed on IDEAS

    as
    1. Daniel Keogh & Daniel K.N. Johnson, 2021. "Survival of the funded: Econometric analysis of startup longevity and success," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 17(4), pages 29-49.
    2. Luisa Herck Giaquinto & Adriana Bruscato Bortoluzzo, 2020. "Angel investors, seed-stage investors and founders influence on FinTech funding: an emerging market context," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 13(3), pages 276-294, September.
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    Cited by:

    1. Zhang, Mi & Zhou, Ning & Gao, Jie & Jiang, Ping & Zhang, Yang & Wang, Yining & Chen, Lusha, 2025. "The long-term impact of entrepreneurial financing on job creation based on the roles of venture capital and angel investment," Finance Research Letters, Elsevier, vol. 85(PA).
    2. Dimitris Manolopoulos & Michail Xenakis & Panagiota Karvela, 2025. "Paving the Way to Success: Linking the Strategic Ecosystem of Entrepreneurial Start-Ups with Market Performance," Sustainability, MDPI, vol. 17(18), pages 1-25, September.
    3. Eliran Solodoha & Stav Rosenzweig, 2025. "The Relationship Between Entrepreneurs’ Founding Experience, Investing Angels and Start-ups’ Technological Output," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 34(3), pages 522-562, August.

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