The Role of Angel Syndicates on the Demand and Supply of Informal Venture Capital

The recent explosion of the informal venture capital is stimulating finance scholars to deeply investigate the major determinants, characteristics and possible implications of this phenomenon within the start-up ecosystems. The rising literature on business angels (BAs) still misses to adequately cover many investigation areas, such as the operations and the role played by the different typologies of BA networks (BANs) and the valuation of the contributions provided by BAs to the performance of the angel-backed companies. The contributions of Bonini et al. (2018, 2019) are part of the ongoing debate on these two research areas that have not yet been exhaustively explored. The two papers show that the affiliation to an angel community affects BAs’ investment decisions, though it doesn’t seem to have a significant impact on the survival and profitability of the funded ventures. On the contrary, by co-investing in an angel syndicate, BAs may enjoy risk- and information-sharing benefits that structurally affect both their investment practices and the performance of the funded ventures. Also, the BAs’ willingness to play an active role does have a positive impact on angel-backed companies’ survival and growth. Finally, the intensity of BAs’ soft monitoring seems negatively related to the performance of the funded ventures because of the impact on the trust-based entrepreneur– angel relationship. However, angel communities might be able to decrease and distribute within the network the need for individual monitoring while increasing members’ confidence in the angel investments