A comparison of Business Angels and Venture Capitalists The case of technological startups
Cohen Stuart, A.M.B.
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In this research the differences between business angels (BA’s) and venture capitalists (VC’s) is investigated. A firm perspective was used in order to find out how these investors help with resource base and the dynamic capabilities of the firm they invest in. Previous work of Fried & Hirsch (1995), in which they investigate how VC help the firms they invest in with their resource base, was used as a starting point to investigate how BA’s help with the resources of the firms. The article of Eisenhardt & Martin (2000) about dynamic capabilities was used as a starting point for finding dynamic capabilities that investor can help with. Two firms with BA investors and four firms with VC investors that all have technological innovations were interviewed and analyzed. The of the results of the research are that BA’s help with the same resources as VC’s (network, image, business knowledge and pressure), but there are some difference. BA’s don’t replace CEO’s and use less formal ways to pressure the management of the firm. There is also big overlap in how investors help with the dynamic capabilities of the firm. There are clearly more and less active investors, both BA’s and VC’s. Again VC’s are more likely to hire someone to help with the capabilities, while BA’s will themselves help the firms.