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Determinants of long-distance investing by business angels in the UK

Determinants of long-distance investing by business angels in the UK The business angel market is usually identified as a local market, and the proximity of an investment has been shown to be key in the angel's investment preferences and an important filter at the screening stage of the investment decision. This is generally explained by the personal and localized networks used to identify potential investments, the hands-on involvement of the investor and the desire to minimize risk. However, a significant minority of investments are long distance. This paper is based on data from 373 investments made by 109 UK business angels. We classify the location of investments into three groups: local investments (those made within the same county or in adjacent counties); intermediate investments (those made in counties adjacent to the ‘local’ counties); and long-distance investments (those made beyond this range). Using ordered logit analysis the paper develops and tests a number of hypotheses that relate long-distance investment to investment characteristics and investor characteristics. The paper concludes by drawing out the implications for entrepreneurs seeking business angel finance in investment-deficient regions, business angel networks seeking to match investors to entrepreneurs and firms (which are normally their primary clients), and for policy-makers responsible for local and regional economic development. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Entrepreneurship & Regional Development Taylor & Francis

Determinants of long-distance investing by business angels in the UK

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References (71)

Publisher
Taylor & Francis
Copyright
Copyright Taylor & Francis Group, LLC
ISSN
1464-5114
eISSN
0898-5626
DOI
10.1080/08985620802545928
Publisher site
See Article on Publisher Site

Abstract

The business angel market is usually identified as a local market, and the proximity of an investment has been shown to be key in the angel's investment preferences and an important filter at the screening stage of the investment decision. This is generally explained by the personal and localized networks used to identify potential investments, the hands-on involvement of the investor and the desire to minimize risk. However, a significant minority of investments are long distance. This paper is based on data from 373 investments made by 109 UK business angels. We classify the location of investments into three groups: local investments (those made within the same county or in adjacent counties); intermediate investments (those made in counties adjacent to the ‘local’ counties); and long-distance investments (those made beyond this range). Using ordered logit analysis the paper develops and tests a number of hypotheses that relate long-distance investment to investment characteristics and investor characteristics. The paper concludes by drawing out the implications for entrepreneurs seeking business angel finance in investment-deficient regions, business angel networks seeking to match investors to entrepreneurs and firms (which are normally their primary clients), and for policy-makers responsible for local and regional economic development.

Journal

Entrepreneurship & Regional DevelopmentTaylor & Francis

Published: Mar 1, 2010

Keywords: business angels; informal investment; distance; regional development; venture creation

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