Business Angel Academies: Unleashing the Potential for Business Angel Investment

Abstract

Previous research has highlighted the existence of an information problem (information gap) among business angels, mainly due to their desire to keep a low public profile and to the informal character of the market. The creation of business angels' networks was promoted in order to deal with this gap. This approach, however, only partly succeeded in converting the stock of virgin angels into active informal investors. On the basis of the study of a sample of investors attending a business angels' academy, this paper argues that such a conversion can only be significant if the problem is approached from the perspective of their lack of understanding of the investment process. An important source of difficulty in the development and establishment of informal investment projects is the fact that many angels (especially potential angels) lack an adequate understanding of the investment process. They are therefore unable to take advantage of the investment opportunities that might arise. The implication is that there is a need for a new form of intervention: the creation of business angel schools or academies, conceived of as frameworks for the exchange of experiences and closer co-operation.

Keywords:

• Business angels
• investment skills
• knowledge gap
• business angel academy

Acknowledgments

We would like to thank Juan Luis Segurado, Research Associate at IESE, for his useful comments, insights and work on the data.

Notes

Cabinet Director of the Flemish Minister for Economy

Additional information

Notes on contributors

Rudy Aernoudt

Cabinet Director of the Flemish Minister for Economy