hh.sePublications
Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Informal investors as entrepreneurs
Halmstad University, School of Business and Engineering (SET).
1998 (English)In: Technovation, ISSN 0166-4972, E-ISSN 1879-2383, Vol. 18, no 5, p. 321-333Article in journal (Refereed) Published
Abstract [en]

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.

Place, publisher, year, edition, pages
Amsterdam: Elsevier, 1998. Vol. 18, no 5, p. 321-333
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:hh:diva-18795DOI: 10.1016/S0166-4972(98)00001-7ISI: 000074561600003Scopus ID: 2-s2.0-0032058426OAI: oai:DiVA.org:hh-18795DiVA, id: diva2:539843
Available from: 2012-07-05 Created: 2012-06-25 Last updated: 2017-12-07Bibliographically approved

Open Access in DiVA

No full text in DiVA

Other links

Publisher's full textScopus
By organisation
School of Business and Engineering (SET)
In the same journal
Technovation
Social Sciences

Search outside of DiVA

GoogleGoogle Scholar

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 94 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf