What Drives Micro-Angel Investments?

Posted: 22 Aug 2008

See all articles by Markku V. J. Maula

Markku V. J. Maula

Aalto University, Department of Industrial Engineering and Management

Pia Arenius

Turku School of Economics

Erkko Autio

HEC Lausanne

Date Written: November 2005


Despite of the significant role of informal venture capital in the financing of new entrepreneurial ventures, there is little research explaining the factors determining the propensity of individuals to make microangel investments. Building on two theoretical frameworks, a social psychological theory of planned behavior and an economic theory on the determinants of demand for risky assets in household portfolios, we develop a set of hypotheses predicting the propensity of individuals to make informal investments in new businesses owned by others. In our analysis we test whether the determinants of micro-angel investments are similar when investing in a business owned by a close family member versus more distant business. The hypotheses are tested using data from 6007 interviews of Finnish adults carried out in the Global Entrepreneurship Monitor program in 2000-2002. The findings show that the theoretical frameworks have more power in explaining investments in firms not owned by close family members. The study provides new understanding of the differences in the drivers of different types of micro-angel investments.

Keywords: Household portfolios, informal venture capital, theory of planned behavior

JEL Classification: G24, G28, M13, D14

Suggested Citation

Maula, Markku V. J. and Arenius, Pia and Autio, Erkko, What Drives Micro-Angel Investments? (November 2005). Small Business Economics, Vol. 25, No. 5, 2005, Available at SSRN: https://ssrn.com/abstract=1246513

Markku V. J. Maula (Contact Author)

Aalto University, Department of Industrial Engineering and Management ( email )

PO Box 15500
FI-00076 AALTO

HOME PAGE: http://users.aalto.fi/mmaula/

Pia Arenius

Turku School of Economics ( email )

Rehtorinpellonkatu 3
TURKU, FI-20500

Erkko Autio

HEC Lausanne ( email )

Institut Stratège
Lausanne, 1015

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