Informal investors as entrepreneurs--the development of an entrepreneurial career

Informal investors have proved to be highly valuable for the growth of the firms in which they have invested. Therefore, it is important to understand what motivates potential informal investors to make their initial investment as well as how already active investors develop their entrepreneurial careers. Such an understanding may prove helpful in directing efforts to locate and attract potential and existing informal investors. This paper investigates the entrepreneurial career of four informal investors. Based on the personal stories of these individuals, we explore their career patterns and present the central concepts of the different career phases they have progressed through. The results indicate that informal investors have experienced three overall career phases: (1) the corporate career phase; (2) the entrepreneurial learning phase; and (3) the integrated investment career phase. Each career phase provides informal investors with possibilities for learning and developing valuable competencies in order to advance in their entrepreneurial career. During the corporate career phase, the investors learn a 'managerial logic' and create a platform on which they can build up their managerial competence, establish a network, and legitimize their reputation. In the following entrepreneurial learning phase, the investors make use of this platform in varying entrepreneurial projects, mainly as consultants, which in turn provides them with the possibilities for learning the 'logic' behind entrepreneurial processes. During the integrated investment career phase, informal investors extend the platform by making use of their managerial and entrepreneurial competence in the firms in which they invest, and thus act as both entrepreneurs and informal investors in the firms in which they are involved.