Assessment of Business Angel Activity in Northern European Countries

Abstract

Business angels are one of the main sources of financing for innovative start-up companies. In this regard, it has been discussed in the existing literature that policy-makers and stakeholders are in great need for a tool to measure the level and scale of the development of the business angel market. It has been also mentioned that business angel activity in different countries is highly heterogeneous. However, so far in the existing literature the comparison of the level of business angel activity in the countries of Northern Europe has not been made. Therefore, the aim of our research is to compare the level of the visible business angel market activity in Northern European countries. To conduct a comparative assessment of the business angels' activity, we used the Business Angel Activity Index calculation methodology developed by us. In this methodology, we justified the set of indicators and the weight of indicators for the calculation of the composite index. We have discovered that in 2016 – 2017 Estonia and Finland demonstrated the highest level of business angel activity among the countries of Northern Europe. We have also established that population size, the size of economy and GDP per capita rate in the Northern European countries are not the main factors that have a considerable impact on the level of business angel activity. Moreover, we confirm that business angel activity in the countries of Northern Europe is highly heterogeneous. We have also found that high scores of the ratio of the number of business angels to the working population in particular countries do not guarantee high level of business angel investment activity in these countries. The paper also discusses the number of factors ensuring high business angel activity.

Keywords: business angels, business angel activity, business angel investment, Northern Europe

JEL Classification: G24, E22, C18