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An Investigation of the perceived decision making criteria of virgin angels in Sweden

Rizk, Mohamed LU and Kroon, Mattias (2015) ENTN19 20151
Department of Business Administration
Abstract
It has been discussed how important the contributions of informal investors in supporting entrepreneurs and developing startups. The market for informal venture capital is almost invisible source of financing for entrepreneurial ventures, which can explain the difficulty of finding these investors. However, what if the entrepreneur were able to find virgin angel, private individuals who want to undertake investments in unquoted companies, but never invested in one before. Research has been conducted to identify choice criteria of typical business angels. Nonetheless, this thesis attempt to identify the perceived choice criteria in investment decision making process by virgin angels.
The findings indicate that virgin angels perceive... (More)
It has been discussed how important the contributions of informal investors in supporting entrepreneurs and developing startups. The market for informal venture capital is almost invisible source of financing for entrepreneurial ventures, which can explain the difficulty of finding these investors. However, what if the entrepreneur were able to find virgin angel, private individuals who want to undertake investments in unquoted companies, but never invested in one before. Research has been conducted to identify choice criteria of typical business angels. Nonetheless, this thesis attempt to identify the perceived choice criteria in investment decision making process by virgin angels.
The findings indicate that virgin angels perceive similar choice criteria used as typical business angels. They take consideration both the desirable and undesirable attributes for the business and the team before taking their decision to invest or not. They prefer entrepreneurs or teams that are realistic, with good personal attribute such as integrity, deep market knowledge and considerable track record. They prefer to invest in businesses that is related to their previous experience, giving them a high profit returns, with a foreseeable exit and wants to take a role in the firm. Virgin angels would reject teams lacking personal qualities, realistic expectations and management knowledge. Also they would turn down opportunities with low profit return, insufficient information and unbalanced team.
However, it was observed that virgin angel had more criteria involved over the active business angel. Virgin angels, want to be more involved in the company and they also want to invest in opportunities that can be related to their previous experience. Both criteria indicates and proves that virgin angels are less wealthy than business angels and would prefer take invest in a known market to reduce the risk and to increase their chances to make high profit out of the first investment. (Less)
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author
Rizk, Mohamed LU and Kroon, Mattias
supervisor
organization
course
ENTN19 20151
year
type
H1 - Master's Degree (One Year)
subject
keywords
and Informal investors, Entrepreneurial finance, Decision criterion, Virgin angel
language
English
id
7519297
date added to LUP
2016-01-22 14:33:43
date last changed
2016-01-22 14:33:43
@misc{7519297,
  abstract     = {It has been discussed how important the contributions of informal investors in supporting entrepreneurs and developing startups. The market for informal venture capital is almost invisible source of financing for entrepreneurial ventures, which can explain the difficulty of finding these investors. However, what if the entrepreneur were able to find virgin angel, private individuals who want to undertake investments in unquoted companies, but never invested in one before. Research has been conducted to identify choice criteria of typical business angels. Nonetheless, this thesis attempt to identify the perceived choice criteria in investment decision making process by virgin angels.
The findings indicate that virgin angels perceive similar choice criteria used as typical business angels. They take consideration both the desirable and undesirable attributes for the business and the team before taking their decision to invest or not. They prefer entrepreneurs or teams that are realistic, with good personal attribute such as integrity, deep market knowledge and considerable track record. They prefer to invest in businesses that is related to their previous experience, giving them a high profit returns, with a foreseeable exit and wants to take a role in the firm. Virgin angels would reject teams lacking personal qualities, realistic expectations and management knowledge. Also they would turn down opportunities with low profit return, insufficient information and unbalanced team.
However, it was observed that virgin angel had more criteria involved over the active business angel. Virgin angels, want to be more involved in the company and they also want to invest in opportunities that can be related to their previous experience. Both criteria indicates and proves that virgin angels are less wealthy than business angels and would prefer take invest in a known market to reduce the risk and to increase their chances to make high profit out of the first investment.},
  author       = {Rizk, Mohamed and Kroon, Mattias},
  keyword      = {and Informal investors,Entrepreneurial finance,Decision criterion,Virgin angel},
  language     = {eng},
  note         = {Student Paper},
  title        = {An Investigation of the perceived decision making criteria of virgin angels in Sweden},
  year         = {2015},
}