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Newly created firms and informal angel investors: A four-stage model of network development

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  • Lloyd Steier
  • Royston Greenwood

Abstract

Informal angel investors represent a significant source of venture capital for newly-created firms; however, the process whereby entrepreneurs access this resource has often been described as 'invisible' and in need of further study. This paper subscribes to a 'networking' or 'relational' view of economic action and reports the findings of a longitudinal study of the development and evolution of a financial network within a newly created firm. It describes the network from the time the firm was founded in 1987 until 1996, by which time the firm had raised a significant amount of venture capital and was considering going public. The findings contribute to the entrepreneurship and financial literature by focusing on how entrepreneurs become connected to angel investors and subsequently manage the process of network development. The authors propose a four-stage model: initial navigation/'kissing frogs', consolidation, enrichment, and reconfiguration.

Suggested Citation

  • Lloyd Steier & Royston Greenwood, 1999. "Newly created firms and informal angel investors: A four-stage model of network development," Venture Capital, Taylor & Francis Journals, vol. 1(2), pages 147-167, April.
    • Handle: RePEc:taf:veecee:v:1:y:1999:i:2:p:147-167
    DOI: 10.1080/136910699295947
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    Cited by:

    1. Estapé-Dubreuil, Glòria & Ashta, Arvind & Hédou, Jean-Pierre, 2016. "Micro-equity for sustainable development: Selection, monitoring and exit strategies of micro-angels," Ecological Economics, Elsevier, vol. 130(C), pages 117-129.
    2. Steier, Lloyd, 2003. "Variants of agency contracts in family-financed ventures as a continuum of familial altruistic and market rationalities," Journal of Business Venturing, Elsevier, vol. 18(5), pages 597-618, September.
    3. Smith, Delmonize A. & Lohrke, Franz T., 2008. "Entrepreneurial network development: Trusting in the process," Journal of Business Research, Elsevier, vol. 61(4), pages 315-322, April.
    4. Vincent Lefebvre & Miruna Radu Lefebvre & Eric Pierre Simon, 2015. "Formal entrepreneurial networks as communities of practice: a longitudinal case study," Post-Print hal-01217308, HAL.

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