Influencing Factors of the Informal Investment in Central Europe
DOI:
https://doi.org/10.2478/eb-2020-0006Keywords:
Entrepreneurship, Global Entrepreneurship Monitor, Informal investment, Start-upsAbstract
This paper examines the influencing factors of becoming informal investors in two groups of Central European countries: the innovation-driven (Estonia, Latvia, Slovenia and Slovakia) and efficiency-driven economies (Croatia, Hungary, Lithuania, Poland and Romania), based on the GEM (Global Entrepreneurship Monitor) database from 2014. According to the results, in the studied innovation-driven economies of Central Europe the probability of becoming an informal investor is higher for those, who know other entrepreneurs, who are confident in their own entrepreneurial skills, who are in the higher percentile of the household income, who are older and male. The results also suggest that in the studied efficiency-driven economies of Central Europe the probability of becoming an informal investor is higher for those who are confident in the own entrepreneurial skills, who know other entrepreneurs, who are in the higher percentile of the household income, who are older and male. The probability is decreased, if somebody is employed full-time. The study emphasises similarities instead of differences regarding the analysed aspect between the two groups of countries.References
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Avdeitchikova, S. (2008). On the structure of the informal venture capital market in Sweden: developing investment roles. Venture Capital, 10(1), 55–85. https://doi.org/10.1080/13691060701605504
Brettel, M. (2003). Business angels in Germany: A research note. Venture Capital, 5(3), 251–268. https://doi.org/10.1080/1369106032000122095
Carpentier, C. & Suret, J.-M. (2015). Angel group members’ decision process and rejection criteria: A longitudinal analysis. Journal of Business Venturing, 30(6), 808–821. https://doi.org/10.1016/j.jbusvent.2015.04.002
Collewaert, V. (2012). Angel investors’ and entrepreneurs’ intentions to exit their ventures: a conflict perspective. Entrepreneurship Theory and Practice, 36(4), 753–779. https://doi.org/10.1111/j.1540-6520.2011.00456.x
Dézsi-Benyovszki A. & Szabó T. P. (2017). Intrapreneurs and entrepreneurs – Do they differ in Romania? Acta Oeconomica, 67(1), 43–61. https://doi.org/10.1556/032.2017.67.1.3
Ding, Z., Au, K. & Chiang, F. (2015). Social trust and angel investors’ decisions: A multilevel analysis across nations. Journal of Business Venturing, 30(2), 307–321. https://doi.org/10.1016/j.jbusvent.2014.08.003
Duxbury, L., Haines, G. & Riding, A. (1996). A personality profile of Canadian informal investors. Journal of Small Business Management, 34(2), 44–55.
Erikson, T. & Sørheim, R. (2005). “Technology angels” and other informal investors. Technovation, 25(5), 489–496. https://doi.org/10.1016/j.technovation.2003.09.007
Feeney, L., Haines, G. H. & Riding, A. L. (1999). Private investors’ investment criteria: Insights from qualitative data. Venture Capital, 1(2), 121–145. https://doi.org/10.1080/136910699295938
Freear, J., Sohl, J. E. & Wetzel, W. E. (1995). Angels: personal investors in the venture capital market. Entrepreneurship & Regional Development, 7(1), 85–94. https://doi.org/10.1080/08985629500000005
Györfy, L. (2014). Socio-demographic and perceptional factors influencing early-stage entrepreneurship in Romania. Közgazdász Fórum, 17(6), 41–56.
Harrison, R. T. & Mason, C.M. (2000). Venture capital market complementarities: The links between business angels and venture capital funds in the United Kingdom. Venture Capital, 2(3), 223–242. https://doi.org/10.1080/13691060050135091
Harrison, R., Mason, C. & Robson, P. (2010). Determinants of long-distance investing by business angels in the UK. Entrepreneurship & Regional Development, 22(2), 113–137. https://doi.org/10.1080/08985620802545928
Haines, Jr. G. H., Madill, J. J. & Riding, A. L. (2003). Informal Investment in Canada: Financing Small Business Growth. Journal of Small Business & Entrepreneurship, 16(3-4), 13–40. https://doi.org/10.1080/08276331.2003.10593306
Hindle, K. & Wenban, R. (1999). Australia’s informal venture capitalists: An exploratory profile. Venture Capital, 1(2), 169–186. https://doi.org/10.1080/136910699295956
Hindle, K. & Lee, L. (2002). An exploratory investigation of informal venture capitalists in Singapore. Venture Capital, 4(2), 169–177. https://doi.org/10.1080/13691060110091255
Jones-Evans, D. & Thompson, P. (2009). The Spatial Dispersion of Informal Investment at a Regional Level: Evidence from the UK. European Planning Studies, 17(5), 659–675. https://doi.org/10.1080/09654310902782138
Keller, J. & Pastusiak, R. (2016). The psychology of investing: Stock market recommendations and their impact on investors’ decisions (the example of the Polish stock market). Acta Oeconomica, 66(3), 419–437. https://doi.org/10.1556/032.2016.66.3.3
Kelly, P. (2007). Business angel research: the road travelled and the journey ahead. In Handbook of Research on Venture Capital, Hans Landström (Eds). Edward Elgar Pub. UK. https://doi.org/10.4337/9781847208781.00021
Lahti, T. (2011). Categorization of angel investments: an explorative analysis of risk reduction strategies in Finland. Venture Capital, 13(1), 49–74. https://doi.org/10.1080/13691066.2010.543322
Landström, H. (1993). Informal risk capital in Sweden and some international comparisons. Journal of Business Venturing, 8(6), 525–540. https://doi.org/10.1016/0883-9026(93)90037-6
Lumme, A., Mason, C. & Suomi, M. (1996). The returns from informal venture capital investments: an exploratory survey. Journal of Entrepreneurial and Small Business Finance, 5, 139–158.
Månsson, N. & Landström, H. (2006). Business angels in a changing economy: The case of Sweden. Venture Capital, 8(4), 281–301. https://doi.org/10.1080/13691060600836275
Mason, C. M. & Harrison, R. T. (2008). Measuring business angel investment activity in the United Kingdom: a review of potential data sources. Venture Capital, 10(4), 309–330. https://doi.org/10.1080/13691060802380098
Mason, C. M. (2009). Public policy support for the informal venture capital market in Europe: a critical review. International Small Business Journal, 27(5), 536–556. https://doi.org/10.1177/0266242609338754
Mason, C. & Harrison, R. (2017). Informal venture capital and the financing of emerging growth businesses. Chapter 11 in D. L. Sexton & H. Landström (eds). The Blackwell Handbook of Entrepreneurship, Blackwell Publishers Ltd. https://doi.org/10.1002/9781405164214.ch11
Moen, Ø., Sørheim, R. & Erikson, T. (2008). Born global firms and informal investors: examining investor characteristics. Journal of Small Business Management, 46(4), 536–549. https://doi.org/10.1111/j.1540-627X.2008.00255.x
Paul, S., Whittam, G. & Johnston, J. B. (2003): The operation of the informal venture capital market in Scotland. Venture Capital, 5(4), 313–335. https://doi.org/10.1080/1369106032000141931
Paul, S., Whittam, G. & Wyper, J. (2007). Towards a model of the business angel investment process. Venture Capital, 9(2), 107–125. https://doi.org/10.1080/13691060601185425
Politis, D. & Landström, H. (2002). Informal investors as entrepreneurs–the development of an entrepreneurial career. Venture Capital, 4(2), 78–101. https://doi.org/10.1080/13691060210816
Politis, D. (2008). Business angels and value added: what do we know and where do we go? Venture Capital, 10(2), 127–147. https://doi.org/10.1080/13691060801946147
Reitan, B. & Sorheim, R. (2000). The informal venture capital market in Norway? Investor characteristics, behaviour and investment preferences. Venture Capital, 2(2), 129–141. https://doi.org/10.1080/136910600295747
Riding, A. L., Madill, J. J. & Haines, G. H. (2007). Investment decision making by business angels. In H. Landstrom (eds), 2007 Handbook of Research on Venture Capital, Edward Elgar Pub.
Riding, A. L. (2008). Business angels and love money investors: segments of the informal market for risk capital. Venture Capital, 10(4), 355–369. https://doi.org/10.1080/13691060802351222
Romaní, G, Atienza, M. & Amorós, J. E. (2012). Informal investors in Chile: an exploratory study from a gender perspective. Journal of Business Economics and Management, 13(1), 111–131. https://doi.org/10.3846/16111699.2011.620141
Sohl, J. E. (2007). The organization of the informal venture capital market. In H. Landstrom (Eds). 2007 Handbook of Research on Venture Capital, Edward Elgar Pub.
Singer, S., Amorós, J. E. & Moska, D. (2015). Global Entrepreneurship Monitor 2014 – GlobalReport. Babson College, Universidad Del Desarrollo, Universiti Tun Abdul Razak, Technológico De Monterrey, London Business School and Global Entrepreneurship Research Consortium (GERA).
Sørheim, R. & Landström, H. (2001). Informal investors - A categorization, with policy implications. Entrepreneurship & Regional Development, 13(4), 351–370. https://doi.org/10.1080/08985620110067511
Sørheim, R. (2005). Business angels as facilitators for further finance: an exploratory study. Journal of Small Business and Enterprise Development, 12(2), 178–191. https://doi.org/10.1108/14626000510594593
Wong, P. K., Ho, Y. P. & Autio, E. (2005). Determinants of angel investing propensity: evidence from the Global Entrepreneurship Monitor Dataset. In: S. A. Zahra, C. G. Brush, P. Davidsson, J. Fiet, P. G. Greene, R. T. Harrison, M. Lerner, C. Mason, G. D. Meyer, J. Sohl and A. Zacharakis (Eds). Frontiers of Entrepreneurship Research 2004, pp. 48–62, Wellesley, MA: Babson College.
Wong, P. K. & Ho, Y. P. (2007). Characteristics and determinants of informal investment in Singapore. Venture Capital, 9(1), 43–70. https://doi.org/10.1080/13691060600996772
Wright, M. & Robbie, K. (1998). Venture capital and private equity: A review and synthesis. Journal of Business Finance & Accounting, 25(5-6), 521–570. https://doi.org/10.1111/1468-5957.00201
Aernoudt, R. & Erikson, T. (2002). Business angel networks: a European perspective. Journal of Enterprising Culture, 10(03), 177–187. https://doi.org/10.1142/S0218495802000074
Avdeitchikova, S. (2008). On the structure of the informal venture capital market in Sweden: developing investment roles. Venture Capital, 10(1), 55–85. https://doi.org/10.1080/13691060701605504
Brettel, M. (2003). Business angels in Germany: A research note. Venture Capital, 5(3), 251–268. https://doi.org/10.1080/1369106032000122095
Carpentier, C. & Suret, J.-M. (2015). Angel group members’ decision process and rejection criteria: A longitudinal analysis. Journal of Business Venturing, 30(6), 808–821. https://doi.org/10.1016/j.jbusvent.2015.04.002
Collewaert, V. (2012). Angel investors’ and entrepreneurs’ intentions to exit their ventures: a conflict perspective. Entrepreneurship Theory and Practice, 36(4), 753–779. https://doi.org/10.1111/j.1540-6520.2011.00456.x
Dézsi-Benyovszki A. & Szabó T. P. (2017). Intrapreneurs and entrepreneurs – Do they differ in Romania? Acta Oeconomica, 67(1), 43–61. https://doi.org/10.1556/032.2017.67.1.3
Ding, Z., Au, K. & Chiang, F. (2015). Social trust and angel investors’ decisions: A multilevel analysis across nations. Journal of Business Venturing, 30(2), 307–321. https://doi.org/10.1016/j.jbusvent.2014.08.003
Duxbury, L., Haines, G. & Riding, A. (1996). A personality profile of Canadian informal investors. Journal of Small Business Management, 34(2), 44–55.
Erikson, T. & Sørheim, R. (2005). “Technology angels” and other informal investors. Technovation, 25(5), 489–496. https://doi.org/10.1016/j.technovation.2003.09.007
Feeney, L., Haines, G. H. & Riding, A. L. (1999). Private investors’ investment criteria: Insights from qualitative data. Venture Capital, 1(2), 121–145. https://doi.org/10.1080/136910699295938
Freear, J., Sohl, J. E. & Wetzel, W. E. (1995). Angels: personal investors in the venture capital market. Entrepreneurship & Regional Development, 7(1), 85–94. https://doi.org/10.1080/08985629500000005
Györfy, L. (2014). Socio-demographic and perceptional factors influencing early-stage entrepreneurship in Romania. Közgazdász Fórum, 17(6), 41–56.
Harrison, R. T. & Mason, C.M. (2000). Venture capital market complementarities: The links between business angels and venture capital funds in the United Kingdom. Venture Capital, 2(3), 223–242. https://doi.org/10.1080/13691060050135091
Harrison, R., Mason, C. & Robson, P. (2010). Determinants of long-distance investing by business angels in the UK. Entrepreneurship & Regional Development, 22(2), 113–137. https://doi.org/10.1080/08985620802545928
Haines, Jr. G. H., Madill, J. J. & Riding, A. L. (2003). Informal Investment in Canada: Financing Small Business Growth. Journal of Small Business & Entrepreneurship, 16(3-4), 13–40. https://doi.org/10.1080/08276331.2003.10593306
Hindle, K. & Wenban, R. (1999). Australia’s informal venture capitalists: An exploratory profile. Venture Capital, 1(2), 169–186. https://doi.org/10.1080/136910699295956
Hindle, K. & Lee, L. (2002). An exploratory investigation of informal venture capitalists in Singapore. Venture Capital, 4(2), 169–177. https://doi.org/10.1080/13691060110091255
Jones-Evans, D. & Thompson, P. (2009). The Spatial Dispersion of Informal Investment at a Regional Level: Evidence from the UK. European Planning Studies, 17(5), 659–675. https://doi.org/10.1080/09654310902782138
Keller, J. & Pastusiak, R. (2016). The psychology of investing: Stock market recommendations and their impact on investors’ decisions (the example of the Polish stock market). Acta Oeconomica, 66(3), 419–437. https://doi.org/10.1556/032.2016.66.3.3
Kelly, P. (2007). Business angel research: the road travelled and the journey ahead. In Handbook of Research on Venture Capital, Hans Landström (Eds). Edward Elgar Pub. UK. https://doi.org/10.4337/9781847208781.00021
Lahti, T. (2011). Categorization of angel investments: an explorative analysis of risk reduction strategies in Finland. Venture Capital, 13(1), 49–74. https://doi.org/10.1080/13691066.2010.543322
Landström, H. (1993). Informal risk capital in Sweden and some international comparisons. Journal of Business Venturing, 8(6), 525–540. https://doi.org/10.1016/0883-9026(93)90037-6
Lumme, A., Mason, C. & Suomi, M. (1996). The returns from informal venture capital investments: an exploratory survey. Journal of Entrepreneurial and Small Business Finance, 5, 139–158.
Månsson, N. & Landström, H. (2006). Business angels in a changing economy: The case of Sweden. Venture Capital, 8(4), 281–301. https://doi.org/10.1080/13691060600836275
Mason, C. M. & Harrison, R. T. (2008). Measuring business angel investment activity in the United Kingdom: a review of potential data sources. Venture Capital, 10(4), 309–330. https://doi.org/10.1080/13691060802380098
Mason, C. M. (2009). Public policy support for the informal venture capital market in Europe: a critical review. International Small Business Journal, 27(5), 536–556. https://doi.org/10.1177/0266242609338754
Mason, C. & Harrison, R. (2017). Informal venture capital and the financing of emerging growth businesses. Chapter 11 in D. L. Sexton & H. Landström (eds). The Blackwell Handbook of Entrepreneurship, Blackwell Publishers Ltd. https://doi.org/10.1002/9781405164214.ch11
Moen, Ø., Sørheim, R. & Erikson, T. (2008). Born global firms and informal investors: examining investor characteristics. Journal of Small Business Management, 46(4), 536–549. https://doi.org/10.1111/j.1540-627X.2008.00255.x
Paul, S., Whittam, G. & Johnston, J. B. (2003): The operation of the informal venture capital market in Scotland. Venture Capital, 5(4), 313–335. https://doi.org/10.1080/1369106032000141931
Paul, S., Whittam, G. & Wyper, J. (2007). Towards a model of the business angel investment process. Venture Capital, 9(2), 107–125. https://doi.org/10.1080/13691060601185425
Politis, D. & Landström, H. (2002). Informal investors as entrepreneurs–the development of an entrepreneurial career. Venture Capital, 4(2), 78–101. https://doi.org/10.1080/13691060210816
Politis, D. (2008). Business angels and value added: what do we know and where do we go? Venture Capital, 10(2), 127–147. https://doi.org/10.1080/13691060801946147
Reitan, B. & Sorheim, R. (2000). The informal venture capital market in Norway? Investor characteristics, behaviour and investment preferences. Venture Capital, 2(2), 129–141. https://doi.org/10.1080/136910600295747
Riding, A. L., Madill, J. J. & Haines, G. H. (2007). Investment decision making by business angels. In H. Landstrom (eds), 2007 Handbook of Research on Venture Capital, Edward Elgar Pub.
Riding, A. L. (2008). Business angels and love money investors: segments of the informal market for risk capital. Venture Capital, 10(4), 355–369. https://doi.org/10.1080/13691060802351222
Romaní, G, Atienza, M. & Amorós, J. E. (2012). Informal investors in Chile: an exploratory study from a gender perspective. Journal of Business Economics and Management, 13(1), 111–131. https://doi.org/10.3846/16111699.2011.620141
Sohl, J. E. (2007). The organization of the informal venture capital market. In H. Landstrom (Eds). 2007 Handbook of Research on Venture Capital, Edward Elgar Pub.
Singer, S., Amorós, J. E. & Moska, D. (2015). Global Entrepreneurship Monitor 2014 – GlobalReport. Babson College, Universidad Del Desarrollo, Universiti Tun Abdul Razak, Technológico De Monterrey, London Business School and Global Entrepreneurship Research Consortium (GERA).
Sørheim, R. & Landström, H. (2001). Informal investors - A categorization, with policy implications. Entrepreneurship & Regional Development, 13(4), 351–370. https://doi.org/10.1080/08985620110067511
Sørheim, R. (2005). Business angels as facilitators for further finance: an exploratory study. Journal of Small Business and Enterprise Development, 12(2), 178–191. https://doi.org/10.1108/14626000510594593
Wong, P. K., Ho, Y. P. & Autio, E. (2005). Determinants of angel investing propensity: evidence from the Global Entrepreneurship Monitor Dataset. In: S. A. Zahra, C. G. Brush, P. Davidsson, J. Fiet, P. G. Greene, R. T. Harrison, M. Lerner, C. Mason, G. D. Meyer, J. Sohl and A. Zacharakis (Eds). Frontiers of Entrepreneurship Research 2004, pp. 48–62, Wellesley, MA: Babson College.
Wong, P. K. & Ho, Y. P. (2007). Characteristics and determinants of informal investment in Singapore. Venture Capital, 9(1), 43–70. https://doi.org/10.1080/13691060600996772
Wright, M. & Robbie, K. (1998). Venture capital and private equity: A review and synthesis. Journal of Business Finance & Accounting, 25(5-6), 521–570. https://doi.org/10.1111/1468-5957.00201
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15.06.2020
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Györfy, L., & Madaras, S. (2020). Influencing Factors of the Informal Investment in Central Europe. Economics and Business, 34, 78-91. https://doi.org/10.2478/eb-2020-0006
