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Business Angels and Firm Performance: First Evidence from Population Data




Business angels dominate early-stage investment in firms, but research on their investment effects is scarce and is limited by sample selection. Therefore, we propose an algorithm for identifying business angel investments from total population data. We apply the algorithm to study business angels’ effects on firm performance, using detailed and longitudinal total population data for individuals and firms in Sweden. Employing these data and a quasi-experimental estimator, we find that business angels invest in firms that already perform above par. There is also a positive effect on subsequent growth compared with control firms. Firms with business angel investments perform better in terms of sales growth, employment growth and the likelihood of becoming a high-growth firm. However, contrary to previous research, we cannot find any impact on firm survival. Overall, our results underline the need to address sample selection issues both in identifying business angels and in evaluating their effects on firm performance.

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  • W. Andersson, Fredrik & Lodefalk, Magnus, 2020. "Business Angels and Firm Performance: First Evidence from Population Data," Working Papers 2020:15, Örebro University, School of Business.
  • Handle: RePEc:hhs:oruesi:2020_015

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    References listed on IDEAS

    1. William R. Kerr & Josh Lerner & Antoinette Schoar, 2014. "The Consequences of Entrepreneurial Finance: Evidence from Angel Financings," The Review of Financial Studies, Society for Financial Studies, vol. 27(1), pages 20-55, January.
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    Cited by:

    1. Wanja Wangondu & Stephen M.A. Muathe, 2023. "Seed Capital and Performance: Reflections and Way Forward for Micro, Small and Medium Enterprises in Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(5), pages 275-283, May.

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    More about this item


    business angels; firm performance; sample selection; population data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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