The Effects of Founding Team Career Experience on Angel Investment Intentions

Abstract

Abstract: Angel investors are playing an increasingly important role in the growth of startups. Compared to venture capital investment, angel investment is associated with higher risk and greater information asymmetry. Utilizing the data of 1,439 startups that are seeking fund in one of the largest angel investment platforms in China, we attempt to reveal the decision-making process of angel investors under extreme uncertainty and information asymmetry. Specifically, we examine the effects of founding teams' career variety on angel investment intention, and the moderating roles of prior relationships and resource allocation system. Our results show that founding teams with higher career variety are more attractive to angel investors. The positive relationship between career variety and angel investment is strengthened when team members have shared prior relationships and established resource allocation system. The findings of this paper have important practical implications for both startups and angel investors.

Key words: founding team, career experience, angel investment, business plans

Shen Rui, Zheng Wei, Lu Jiangyong, Zhong Weiguo. The Effects of Founding Team Career Experience on Angel Investment Intentions[J]. Management Review, 2020, 32(8): 76-90.

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