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Playing the Angel: Decomposing the Value of Early-Stage Investors

On Wednesday, January 19, Professor Dr. Lars Hornuf gave a talk about "Playing the Angel: Decomposing the Value of Early-Stage Investors" at the Finance Research Seminar at TU Munich.

Together with his coauthor Professor Dr. Daniel Blaseg from ESADE Business School he is analyzing the determinants of funding success and consequent firm performance of 2768 early stage ventures that made a business pitch during the Canadian, German, UK or US versions of the reality television show Dragons' Den. Consistent with business angel (BA) and venture capital research they find geographic and industry closeness, the existence of patents and prototypes as well as the authenticity and tonality of the entrepreneurial pitch to have a positive effect on founders getting a deal during the show. Using a relative weight analysis, they evidence that the money BA provide and the screening they undertake are by themselves the most important factor regarding venture survival, subsequent propensity to generate web traffic, and sales. Moreover, having a well-known and well-connected BAs as board member trumps the existence of patents and prototypes with regard to post funding venture performance. These findings have broader implications for BA finance and other nascent players in the entrepreneurial finance ecosystem.

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