Business Angel Investment Process: A study on how fundamentals and experiential learning shape the investment process of Business Angels

University essay from Lunds universitet/Företagsekonomiska institutionen

Abstract: Purpose – This research attempts to add to the understanding of how BAs shape their investment process and how different forms of experience influence this process. By this we will further build on the findings of Harrison et al. (2015) and aim to answer the questions: ‘How do BAs’ fundamentals and investment experiences shape their applied investment strategies and criteria? and ‘Is their experiential learning process limitless or is it completed at some point?’ Methodology – This research was conducted in alignment with a qualitative research approach. Our findings are derived from semi-structured interviews held with five BAs. A cross case analysis was conducted to establish how their fundamentals and experiential learning from conducted investments influence their investment process and criteria and if experiential learning is limited. Findings – The research shows that most of the BAs’ investment criteria and strategies are shaped by the outcome of experiential learning from investing. Fundamentals usually influence the investments process after a certain amount of experiential learning was collected. Apart from that, three paths were revealed in which investment criteria and strategies can develop – the flexible, the semi-flexible and the fixed path. Research limitations – This research is limited to a certain scope of people, regarding the geographical location, investment scope and investment experience, as well as to its qualitative approach when it comes to the method used; namely semi-structured interviews. The information collected is a momentary sample, which only reflects a small group of investors. Practical implications –This research will offer advice to novice and experienced BAs to consciously reflect on their fundamentals and previously gained investment experience and by that allow them to actively influence their investment strategy and criteria in the future.

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