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This paper examines the process that business angels undertake when they invest in new and small businesses. Existing research has generally taken a disaggregated approach and focused on individual stages of the investment process. Based on the empirical evidence gathered from 30 interviews with business angels this paper presents an overarching model of the angel investment process. Underlying factors that generate and sustain the investment process are also identified. A comparison is made between the investment processes in the informal and formal venture capital markets, finding that the emphasis on softer factors differentiates the former from the latter. The paper not only contributes to the existing literature but also provides policy makers, entrepreneurs and prospective angels with a greater understanding of the factors which underpin and sustain the angel investment process.
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Stuart et al. (2007) studied this question.
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