Swedish Business Angels
– German Business Angel Day Halle, 8 October 2007
Nils Månsson
Institute of Economic Research School of Economics and Management, Lund University, Sweden Nils.Mansson@fek.lu.se
Sampling business angels
• There are no public records of business angels.
• Business angels are only a fraction of the general population (probably 0,05-0,15%). • Hence, a non representative sample must be used in order to be able to reach a large number of business angels. • Panel studies are needed to identify trends.
Methods of sampling business angels
• Through business angel networks
• The “snowball method”
• Through articles in newspapers
• Public records of incorporated companies • Wealthy individuals
The survey study
• Mixture of different sub samples. • 1519 questionnaires sent out. • So far 617 questionnaires returned (41%).
• 297 active investors (20%).
• High net investors and densely populated areas overrepresented.
Finding investments
• Business angels need their networks primarily in order to come into contact with new investments. • The networks are used to lesser degree when it comes to evaluating, structuring and managing investments. • There are two different types of investors.
– Those that deliberately and actively create a network to enable them to come into contact with investments. – Those that primarily rely on network ties that originally have been created for other purposes than to carry out informal venture capital investments.
Finding investments
Friends BANs Entrepreneurs Colleagues VC firms Relatives Board membership Banks Agents Lawyers Media Accountants 0%
4% 3% 3% 2% 2% 2% 1% 6% 12% 12% 17% 28%
• Informal every day ties as friends and colleagues are very important.
• BAN plays an important role. Among BAN members 29% of investments are found through BANs. • Formal ties to lawyers, accountants, banks etc 35% play a subordinate role.
5%
10%
15%
20%
25%
30%
The business angels’ investments
• The respondents hold 390 Million Euros in informal venture capital investments. • The average investor invests 333 000 Euros annually, the median investor 90 000 Euros. • The average investor makes 1, 32 investments per year, the median investor makes 1 investment.
The business angels’ investments
100% 80% 60% 40% 20% 0% Seed Start-up Expansion Replacement Capital Buy-out
18% 6% 14% 3% 6% 5% 34% 35% 72%
8%
Invested capital
Companies invested in
Way of exiting
Bankrupcy/liquidation Multiple types of buyer Initial Public Offering The entrepreneur Financial buyer Industrial buyer 0% 10%
4% 3% 5% 4% 9% 18% 54%
7% 13% 17% 20% 46%
20% 2006
30%
40% 2003
50%
60%
Thank you!
Nils Månsson
Institute of Economic Research School of Economics and Management, Lund University, Sweden Nils.Mansson@fek.lu.se