Informal Venture Capital in Central and Southern Europe

What are the financial returns achieved by business angel investors? Which due diligence procedures do they normally undertake prior to their investment decisions? What is their value-add to the start-up companies they invest in? Previous venture capital literature has struggled to find clear answers to these questions - due to lack of relevant public data and difficulty in approaching high-net-worth individuals. By relying on a sample of 136 business angels who carried out 296 investments and realized a total of 133 exits, this study carries out a comprehensive, international comparison of informal investors' characteristics and practices across Italy, Spain and Switzerland. The research investigates the impact of socio-economic factors on business angels' behaviour and financial performance, deriving important implications for investors' associations and policy-makers. A number of recommendations is developed to help governments design effective incentive structures and foster the development of an early-stage financing market in Europe.