Doing good while doing well - A qualitative study on how business angels respond to competing logics in impact investing

Abstract: Impact investing has emerged as a new mechanism by which early-stage start-ups pursuing social or environmental goals are funded. Business angels are critical actors in supporting early-stage start-ups and therefore could play an important part in accelerating this field. However, they have received only little attention in impact investment research. Impact investing represents the cross-over of traditional investing and philanthropy and as these domains originally emerge from diverse sets of institutional logics, impact investors face competing demands and prescriptions which leads to challenges for the actors to navigate their actions. The study explores the responses to this institutional complexity in impact investing along the business angel investment process using a qualitative, multi-case-study approach based on semi-structured interviews. This study shows that during the evaluation, business angels either selectively couple, blend or decouple the institutional logics and during the deal origination and post-investment involvement either only comply with one or blend the two logics. The type of goal held by the impact investor is mirrored in their response during the evaluation. These findings allow for a view past the investment goals and also shed light on how such goals are achieved during the decision-making process.