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Initial Public Offerings And Pre-Ipo Shareholders: Angels Versus Venture Capitalists

Author

Listed:
  • WILLIAM C. JOHNSON

    (Sawyer Business School, Suffolk University, 8 Ashburton Place, Boston, MA 02108, United States)

  • JEFFREY E. SOHL

    (Whittemore School of Business and Economics, University of New Hampshire, 15 Academic Way, Durham, NH 03824, United States)

Abstract

At the time of an initial public offering, shares in a firm are typically held by venture capitalists, insiders, corporate investors and angel investors. We examine the role of angel investors in the IPO process. We find that angel investors provide equity capital in industries venture capitalists are less likely to serve and that shareholders in angel backed IPO firms are more likely to sell their shares at the time of the offering. Where venture capital backed IPO firms have higher underpricing, angel backed IPO firms do not, implying that angels may be the preferred investors for early-stage firms.

Suggested Citation

  • William C. Johnson & Jeffrey E. Sohl, 2012. "Initial Public Offerings And Pre-Ipo Shareholders: Angels Versus Venture Capitalists," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 17(04), pages 1-23.
    • Handle: RePEc:wsi:jdexxx:v:17:y:2012:i:04:n:s1084946712500227
    DOI: 10.1142/S1084946712500227
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    Cited by:

    1. Zhou, Lu Jolly & Zhang, Xinyu & Sha, Yezhou, 2021. "The role of angel investment for technology-based SMEs: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 67(C).
    2. Harrison, Richard T., 2022. "“Pennies from heaven”? Market failure, circuits of capital and policy support for business angels: The case of cross-border angel investment," Journal of Business Venturing Insights, Elsevier, vol. 17(C).

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