The scarcity of risk capital for start-ups and technology-oriented small firms is an ever-recurring theme in the economic debate. In recent years interest in the informal risk capital market, i.e., private individuals who invest their own capital in small unlisted firms, has grown significantly, but our knowledge about this market is relatively limited. Against this background, the aim of this study is to describe and explain the decision-making criteria used by informal investors when assessing new investment proposals. In the study a conjoint method is used in order to measure quantitatively the relative importance of one decision-making criterion in relation to another, In total 34 general decision-making criteria and 35 leadership criteria were identified. A subjective sample of 44 informal investors in Sweden answered either a questionnaire relating to general decision-making criteria or one relating to leadership criteria. The data were coded into a conjoint model in order to process the relative ranking between the decision-making criteria. Earlier research has regarded informal investors as the financiers of small firms, looking at their investments as objects, in this study another interpretation is made and the informal investors are themselves regarded as entrepreneurs, that is they see their investments as subjects. This means that the relationship between the investor and the entrepreneur in the firm in which they invest can be characterised by using the concepts "business creator" and "co-creator", i.e., informal investors look for future business opportunities, and they want to participate in the creation process. This is expressed in their assessment of new investment proposals. For example, the informal investors attach a great deal of weight to decision-making criteria related to the business potential of the investment, the relationship between the entrepreneur and investor, as well as the entrepreneur's own ability to develop his/her firm. Furthermore, informal investors do not have the opportunity to play an executive role in the portfolio firms, and they therefore regard the entrepreneur in the portfolio firm as their stand-in, i.e., co-entrepreneur. This is also expressed in the decision-making criteria used by the informal investors, in that it is entrepreneurs who can be characterised as having entrepreneurial ability, which seems to be what the investors are looking for. Looking at informal investors as entrepreneurs themselves may have several implications for policy-makers as well as for entrepreneurs seeking capital. (C) 1998 Elsevier Science Ltd. All rights reserved.