Angels and Venture Capitalists: Complements or Substitutes?

Hellmann, Thomas, Schure, Paul and Vo, Dan (2015) Angels and Venture Capitalists: Complements or Substitutes? Said Business School Working Paper 2015-2.

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Angel funding is often viewed as a stepping stone towards obtaining venture capital. An alternative perspective is that angel investors and venture capitalists are distinct investor types that rarely mix with each other. Using a unique database from British Columbia, Canada, we provide evidence that angel and venture capital funding are dynamic substitutes, not complements. This finding applies across the performance range. Using an instrumental variable approach based on tax credits, we find evidence of both company-led selection and investor-led treatment effects. The substitutes pattern is more pronounced for casual angels and angel funds than for serial angels.

Item Type: Oxford Saïd Research Paper
Keywords: angel financing; entrepreneurship; venture capital; finance
Subject(s): Finance
Centre: Faculty of Finance
Date Deposited: 05 Mar 2015 17:33
Last Modified: 23 Oct 2015 14:08

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