Experienced business angels: What they know, who they know, and how they contribute to a startup firm's performance

Business angels finance ten times the number of new ventures as do venture capitalists, but they are studied much less. This study assesses a business angel's non-financial contribution to the startup firm. Following a resource-based perspective and using the value-added nature of knowledge and social capital resulting from the business angel's relevant industry and entrepreneurial experience, this study assesses the processes for transferring the knowledge and social capital of the business angel to the startup firm and the impact on the firm's performance. To test the study's hypotheses, data from startup firms that received capital funding from business angels was collected and analyzed. An integrated model addressing the knowledge and social capital processes from business angel experience to the business angel's knowledge and social capital to the organizational knowledge and social capital creation processes to the intermediate steps of organizational creativity and social capital value in terms of knowledge acquisition and finally to a startup firm's performance was developed and tested. The results indicate that a business angel's relevant industry and entrepreneurial experience does have an association to a startup's firm's performance.