Angels: personal investors in the venture capital market

The role of private investors in the equity financing of new technology-based ventures is examined. The research studies the venture capital market from a demand and supply perspective and delineates the role of the private investor with that of the more visible venture capital funds. The entrepreneur's perceptions of raising venture capital are also examined. The research suggests that the private investor is the most common source of seed and start-up financing, especially if the round of financing is less than US$500 000. While private investors are harder to find than their venture capital fund counterparts, it appears to take less time to close a deal with private investors and the financing is less expensive than financing from venture capital funds. Both private investors and venture capital funds add value to their investments through the establishment of working relationships with the ventures they finance, and entrepreneurs perceive these working relationships to be a productive component of the deal.