There must be an angel? Local financial markets, business angels and the financing of innovative start-ups

ABSTRACT

This study addresses the question of whether business angels can fill the gap left by venture capitalists and banks in the financing of innovative start-ups in regions where there is a relatively thin financial supply of bank loans and venture capital investments. The empirical analysis, based on approximately 2000 Italian ventures, highlights the fact that innovative start-ups located in weak local financial ecosystems show a relatively low probability of getting business angel financing. In these areas, angel investing is unlikely to represent a viable and effective informal solution to alleviate regional financing gaps towards innovative start-ups left by more institutionalized financial intermediaries.

KEYWORDS:

• innovative entrepreneurship
• business angels
• local financial markets
• venture capitalists
• banks
• Italy

JEL:

• G20
• L26
• M13
• R11

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Correction

ACKNOWLEDGEMENTS

This study benefited greatly from the comments made by the guest editors, Tomasz Mickiewicz, Boris Mrkajic and three anonymous reviewers. Responsibility for any errors lies solely with the author.

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the author.

ORCID

Luca Grilli http://orcid.org/0000-0003-4550-9276