Investing in technology ventures: what do business angels look for at the initial screening stage?

Mason, C.M. and Harrison, R.T. (2000) Investing in technology ventures: what do business angels look for at the initial screening stage? Reynolds, P.D., Autio, E., Brush, C.G., Bygrave, W.D., Manigart, S., Sapienza, H. and Shaver, K.D. (eds.) In Proceedings of the Twentieth Annual Entrepreneurship Research Conference: Frontiers of Entrepreneurship Research. Babson. pp. 293-304 .

Abstract

Many businesses fail to raise external equity finance because they are not “investment ready.” One of the key aspects of being investment ready is the ability to effectively present their opportunity to investors. This paper examines the role of impression management skills on investor decisions by means of a case study of a presentation by an entrepreneur who was seeking funding for a software venture. The real-time reactions of business angels who watched the presentation on video were captured. Presentation-related issues dominated their reactions. Most investors were critical of the style, content and structure of the presentation. The failure of the entrepreneur to “sell” the opportunity raised doubts in the minds of investors about the ability of the company to sell their product. The implication is that entrepreneurs to develop their impression management skills so that potential investors draw the preferred conclusions. Policy-makers should consider developing initiatives to help entrepreneurs overcome these deficiencies.

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