IDEAS home Printed from
   My bibliography  Save this article

The Returns from Informal Venture Capital Investments: An Exploratory Study


  • Annareetta Lumme

    (Kera Ltd, Helsinki)

  • Colin Mason

    (University of Southampton)

  • Markku Suomi

    (Helsinki University Technology)


Despite the recent increase in research on informal venture capital there are many aspects of this market for which no information exists. One such issue is exits. This exploratory study is the first to address this issue. It is based on a survey of 38 active business angels in Finland who had made a total of 155 investments; 20 of these investors had made 49 exits. Two aspects are addressed. First, evidence is presented on investment performance and the timing and method of exit. Second, the paper explores differences between those investors with a successful track-record of exits and those with an unsuccessful track-record. Differences are identified in terms of motivations for investing, volume and sources of information on investment opportunities, prior relationship with investee businesses, perception of value-added and employment background. However, conclusions should only be regarded as suggestive in view of the small numbers involved.

Suggested Citation

  • Annareetta Lumme & Colin Mason & Markku Suomi, 1996. "The Returns from Informal Venture Capital Investments: An Exploratory Study," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 5(2), pages 139-158, Summer.
  • Handle: RePEc:pep:journl:v:5:y:1996:i:2:p:139-58

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Gorman, Michael & Sahlman, William A., 1989. "What do venture capitalists do?," Journal of Business Venturing, Elsevier, vol. 4(4), pages 231-248, July.
    2. Harrison, Richard T. & Mason, Colin M., 1992. "International perspectives on the supply of informal venture capital," Journal of Business Venturing, Elsevier, vol. 7(6), pages 459-475, November.
    3. Sapienza, Harry J., 1992. "When do venture capitalists add value?," Journal of Business Venturing, Elsevier, vol. 7(1), pages 9-27, January.
    4. Freear, John & Wetzel, William Jr., 1990. "Who bankrolls high-tech entrepreneurs?," Journal of Business Venturing, Elsevier, vol. 5(2), pages 77-89, March.
    5. 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.
    6. Macmillan, Ian C. & Kulow, David M. & Khoylian, Roubina, 1989. "Venture capitalists' involvement in their investments: Extent and performance," Journal of Business Venturing, Elsevier, vol. 4(1), pages 27-47, January.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Wu Zhenyu & Yuan Wenlong & Wei Xueqi, 2012. "The Effects of New Ventures' Resource Strategies on Angels' Investing Outcomes: Big Gains and Big Losses in Angel Investments," Entrepreneurship Research Journal, De Gruyter, vol. 2(3), pages 1-27, July.

    More about this item


    Investment ; Venture Capital; Informal;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pep:journl:v:5:y:1996:i:2:p:139-58. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Craig Everett). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.