Business Angel Exits: Strategies and Processes

Forthcoming, International Research Handbook on Entrepreneurial Finance Edited by Javed G. Hussain and Jonathan M. Scott (Edward Elgar)

38 Pages Posted: 19 May 2015

See all articles by Colin M. Mason

Colin M. Mason

University of Glasgow - Adam Smith Business School

Richard Harrison

University of Edinburgh - Business School

Tiago Botelho

University of East Anglia (UEA) - Norwich Business School

Date Written: May 13, 2015

Abstract

The ultimate purpose of investing in an entrepreneurial business is to achieve a financial return. Yet there is little discussion in the entrepreneurial finance literature on the exit process and only limited evidence on returns. This chapter focuses on business angels. It argues that the main challenge for business angels is in achieving an exit. Previous research indicates that returns from those exits that do occur are skewed: around half of all investments fail and only a small minority generate significant returns. We suggest that the difficulties in achieving profitable exits reflects, in part, the fact that most angels do not adopt an exit-centric approach to their investing. This involves considering the exit at all stages in the investment process, including the initial investment decision. The main features of an exit-centric investment strategy are discussed.

Keywords: angel investor, angel groups, exits, returns

JEL Classification: M13

Suggested Citation

Mason, Colin M. and Harrison, Richard T. and Botelho, Tiago, Business Angel Exits: Strategies and Processes (May 13, 2015). Forthcoming, International Research Handbook on Entrepreneurial Finance Edited by Javed G. Hussain and Jonathan M. Scott (Edward Elgar). Available at SSRN: https://ssrn.com/abstract=2605912

Colin M. Mason

University of Glasgow - Adam Smith Business School ( email )

Glasgow, Scotland
United Kingdom

Richard T. Harrison

University of Edinburgh - Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
United Kingdom

Tiago Botelho (Contact Author)

University of East Anglia (UEA) - Norwich Business School ( email )

Norwich
NR4 7TJ
United Kingdom

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