Contribution of business angel investments: evidence from Estonia
Purpose – This study aims to analyze the contribution of business angels (BAs), defined as wealthy individuals who provide risk capital to entrepreneurial firms without family connections, in Estonia, an emerging country in Eastern Europe. Design/methodology/approach – This study compared the data o...
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Format: | Article |
Language: | English |
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Emerald Publishing
2022-12-01
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Series: | Journal of Capital Markets Studies |
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Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JCMS-08-2022-0033/full/pdf |
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author | Tetsuya Kirihata |
author_facet | Tetsuya Kirihata |
author_sort | Tetsuya Kirihata |
collection | DOAJ |
description | Purpose – This study aims to analyze the contribution of business angels (BAs), defined as wealthy individuals who provide risk capital to entrepreneurial firms without family connections, in Estonia, an emerging country in Eastern Europe. Design/methodology/approach – This study compared the data of the financial and non-financial performance of BA-backed firms with that of “twin” non-BA-backed firms, extracted from all Estonian unlisted firms using propensity score matching. Findings – The results of the comparative analysis showed that BAs were patient enough to allow their investees to spend for future growth rather than squeezing profit from increased sales. This is not patience without options for a BA in a situation in which the investee's sales are deteriorating, but rather deliberate patience in the presence of options for a BA where the investee's sales growth is increasing, contrary to conventional investor behavioral principles. It also showed that BAs' post-investment involvement did not make a direct contribution to their investees' sales, although BAs contributed to the sales increase through BA funding itself. Originality/value – This study has two unique research contributions. First, it shows that the patience of BAs was not a by-product but was intentional, and adds to the debate on whether BAs are patient investors. Second, there are only a few studies on the contribution of BAs to their investees in emerging countries; this study aims to help fill this research gap using the case of Estonia. |
first_indexed | 2024-03-13T01:41:39Z |
format | Article |
id | doaj.art-48f16b74b1134008bc93c27e0480401e |
institution | Directory Open Access Journal |
issn | 2514-4774 |
language | English |
last_indexed | 2024-03-13T01:41:39Z |
publishDate | 2022-12-01 |
publisher | Emerald Publishing |
record_format | Article |
series | Journal of Capital Markets Studies |
spelling | doaj.art-48f16b74b1134008bc93c27e0480401e2023-07-03T12:56:42ZengEmerald PublishingJournal of Capital Markets Studies2514-47742022-12-016328730310.1108/JCMS-08-2022-0033Contribution of business angel investments: evidence from EstoniaTetsuya Kirihata0College of Business Administration, Ritsumeikan University – Osaka Ibaraki Campus, Ibaraki, JapanPurpose – This study aims to analyze the contribution of business angels (BAs), defined as wealthy individuals who provide risk capital to entrepreneurial firms without family connections, in Estonia, an emerging country in Eastern Europe. Design/methodology/approach – This study compared the data of the financial and non-financial performance of BA-backed firms with that of “twin” non-BA-backed firms, extracted from all Estonian unlisted firms using propensity score matching. Findings – The results of the comparative analysis showed that BAs were patient enough to allow their investees to spend for future growth rather than squeezing profit from increased sales. This is not patience without options for a BA in a situation in which the investee's sales are deteriorating, but rather deliberate patience in the presence of options for a BA where the investee's sales growth is increasing, contrary to conventional investor behavioral principles. It also showed that BAs' post-investment involvement did not make a direct contribution to their investees' sales, although BAs contributed to the sales increase through BA funding itself. Originality/value – This study has two unique research contributions. First, it shows that the patience of BAs was not a by-product but was intentional, and adds to the debate on whether BAs are patient investors. Second, there are only a few studies on the contribution of BAs to their investees in emerging countries; this study aims to help fill this research gap using the case of Estonia.https://www.emerald.com/insight/content/doi/10.1108/JCMS-08-2022-0033/full/pdfBusiness angelsRisk capitalComparative analysisPropensity score matchingEstoniaEmerging countries |
spellingShingle | Tetsuya Kirihata Contribution of business angel investments: evidence from Estonia Journal of Capital Markets Studies Business angels Risk capital Comparative analysis Propensity score matching Estonia Emerging countries |
title | Contribution of business angel investments: evidence from Estonia |
title_full | Contribution of business angel investments: evidence from Estonia |
title_fullStr | Contribution of business angel investments: evidence from Estonia |
title_full_unstemmed | Contribution of business angel investments: evidence from Estonia |
title_short | Contribution of business angel investments: evidence from Estonia |
title_sort | contribution of business angel investments evidence from estonia |
topic | Business angels Risk capital Comparative analysis Propensity score matching Estonia Emerging countries |
url | https://www.emerald.com/insight/content/doi/10.1108/JCMS-08-2022-0033/full/pdf |
work_keys_str_mv | AT tetsuyakirihata contributionofbusinessangelinvestmentsevidencefromestonia |