The Consequences of Entrepreneurial Finance: Evidence from Angel Financings

We focus on a neglected segment of entrepreneurial finance: angel investments

William R. Kerr; Josh Lerner; Antoinette Schoar

2013

Scholarcy highlights

  • This paper documents that ventures that are funded by two successful angel groups experience superior outcomes to those that are rejected: they have improved survival, exits, employment levels, patenting, web traffic, and financing
  • We focus on a neglected segment of entrepreneurial finance: angel investments
  • We find qualitative support that funded ventures achieved a successful exit by December 2010, but these results are not statistically significant
  • Results for Entrepreneurial Firms This section documents our empirical results for the consequences of entrepreneurial finance for start-ups
  • The measured employment effect with controls is higher at 38.8 employees if the cap is Column 3 shows that funded ventures are 16%-18% more likely to have a granted patent
  • We find evidence that angel group financing helps in achieving successful exits and reaching high employment levels
  • Our results suggest that some of the ―softer‖ features, such as their mentoring or business contacts, may help new ventures the most

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