This paper formalizes and estimates the process of search and matching between entrepreneurs and financiers in the business angel (BA) market. Our theoretical model describes the market for entrepreneurial finance as a fair in which the two sides of the market can meet bilaterally and transform a rough entrepreneurial idea into a real start-up firm. We then collect a new dataset from the BA markets of 17 developed countries for the period 1996-2014, and we estimate the aggregate matching function expressing the number of deals as a function of the number of submitted entrepreneurial projects and of business angels. Empirical findings confirm the technological features assumed in the theoretical literature: positive and decreasing marginal returns to both inputs (stepping on toes effect), technological complementarity across the two inputs (thick market effect) and constant returns to scale. We discuss the theoretical and policy implications of these findings.

Entrepreneurs meet financiers: Evidence from the business angel market / Cipollone, Angela; Giordani, Paolo E.. - In: JOURNAL OF BUSINESS VENTURING. - ISSN 0883-9026. - 34:5(2019), pp. 1-45. [10.1016/j.jbusvent.2018.11.003]

Entrepreneurs meet financiers: Evidence from the business angel market

Giordani, Paolo E.
2019

Abstract

This paper formalizes and estimates the process of search and matching between entrepreneurs and financiers in the business angel (BA) market. Our theoretical model describes the market for entrepreneurial finance as a fair in which the two sides of the market can meet bilaterally and transform a rough entrepreneurial idea into a real start-up firm. We then collect a new dataset from the BA markets of 17 developed countries for the period 1996-2014, and we estimate the aggregate matching function expressing the number of deals as a function of the number of submitted entrepreneurial projects and of business angels. Empirical findings confirm the technological features assumed in the theoretical literature: positive and decreasing marginal returns to both inputs (stepping on toes effect), technological complementarity across the two inputs (thick market effect) and constant returns to scale. We discuss the theoretical and policy implications of these findings.
Entrepreneurial finance, Angel investors, Matching function estimation, Constant returns to scale
Entrepreneurs meet financiers: Evidence from the business angel market / Cipollone, Angela; Giordani, Paolo E.. - In: JOURNAL OF BUSINESS VENTURING. - ISSN 0883-9026. - 34:5(2019), pp. 1-45. [10.1016/j.jbusvent.2018.11.003]
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/182254
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