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
Date Written: May 13, 2015
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: Suggested Citation