Jeffrey E. Sohl

The early-stage equity market in the USA

As recently as 20 years ago the USA began a transition from a declining industrial and manufacturing economy to an emerging entrepreneurial/innovation-driven economy. With this transition, the early-stage equity market has also evolved. As the institutional venture capital industry continues to focus on later stage and larger investments, the private investor market now provides the major source of seed and start-up capital. However, imperfections in the seed and start-up market have led to market inefficiencies for the high-growth firm. Two funding gaps appear to exist in the US equity market, both largely as a result of these market inefficiencies. This paper provides a broad overview of the early-stage equity market for high-growth ventures in the USA. In light of the critical role of business angels in the early-stage market, special attention will be given to this population. Also included is a discussion of angel markets and recent trends in the early-stage equity financing of entrepreneurial ventures.

Angels: personal investors in the venture capital market

The role of private investors in the equity financing of new technology-based ventures is examined. The research studies the venture capital market from a demand and supply perspective and delineates the role of the private investor with that of the more visible venture capital funds. The entrepreneurs perceptions of raising venture capital are also examined. The research suggests that the private investor is the most common source of seed and start-up financing, especially if the round of financing is less than US

Angles on angels: Financing technology-based ventures - a historical perspective

500 000. While private investors are harder to find than their venture capital fund counterparts, it appears to take less time to close a deal with private investors and the financing is less expensive than financing from venture capital funds. Both private investors and venture capital funds add value to their investments through the establishment of working relationships with the ventures they finance, and entrepreneurs perceive these working relationships to be a productive component of the...

The private equity market in the USA: Lessons from volatility

This paper reviews 20 years of research on the angel segment of the venture capital market. A lot has been learnt from one-shot studies of the attitudes, behaviour and characteristics of business angels. Taxonomies have been developed. However, we now need systematic insights into the dynamics of the angel market. The paper calls for longitudinal studies of angel and entrepreneurial behaviour, information flows, links to other market segments, information quality, formal and informal networks and the latent angel problem. The research base needs to be put on a solid theoretical and conceptual foundation. This research will provide the guidance required by public policy to unlock the capital and know-how of the millions of latent angels.

Women entrepreneurs securing business angel financing: tales from the field

Since the nadir of the early 1990s, the angel and venture capital markets began a rapid recovery followed by a marked decline. These recent market gyrations offer insights into the private equity industry. During the rise, angel and venture capital investments soared, accompanied by rising deal valuations. For the first time since the study of angels was initiated, venture capital investments exceed, in total dollars, the amount of angel investments, although the number of deals remained larger in the angel market. However, unsustainable trends inevitably return to normalcy and these changes have resulted in a restructuring of the market. Angels are reasserting their fundamental role as the major source of seed capital for high growth entrepreneurial ventures. This paper examines the rise and the downturn in the private equity market, and identifies some of the causes for each. Current and future market trends are also identified.

The U.S. Angel and Venture Capital Market: Recent Trends and Developments

While women-led businesses are the fastest growing segment of venture creation in the US economy, the amount of private equity capital investment they receive is disproportionately small. Informal venture capital, or business angel, investment is as large as venture capital activity, and business angels provide the majority of the critical seed and start-up stage capital. This research explores the investment decision process involving women entrepreneurs and business angels from the perspective of demand. Successful strategies of women entrepreneurs are investigated using in-depth interviews. In particular, pre-investment processes, trust, comprehensiveness, the post-investment relationship and gender are examined.

A neural network approach to forecasting model selection

Since the nadir of the early nineties the angel and venture capital markets began a recovery with a vengeance, and recent market gyrations offer yet more insights into the long and winding road of the private equity industry. From a relatively quiet and little noticed beginning, angel and venture capital investments soared, accompanied by a near astronomical rise in deal valuations. For the first time since the study of angels was initiated, venture capital investments exceed, in total dollars, the amount of angel investments, although the number of deals remained larger in the angel market. A classic angel and venture capital boom was in the making. Since the law of gravity has not been repealed, even in the early stage equity financing of high growth ventures, unsustainable trends inevitably return to normalcy. Unfortunately, after such lofty behavior, the return to normalcy often seems a harsh penalty. In general, the carnage has resulted in the needed culling of the forest. Angels are reasserting their fundamental role as the major source of seed capital for high growth entrepreneurial ventures. Patient investing is back in vogue and unsustainable expectations have been discarded into the trash heap of an overheated market. This article examines the rise and the downturn in the private equity market, and identifies some of the causes for each. Current and future market trends are also identified.

An intelligent model selection and forecasting system

Abstract The literature has shown that no one model provides the most accurate forecasts. The focus has instead shifted to identifying the characteristics of the time series in order to provide guidelines for choosing the most appropriate extrapolation model. In this paper we test the feasibility of employing the neural network structure for model selection. To accomplish this objective, a set of time series characteristics, representing the domain knowledge, is established. A back propagation neural network is then constructed with eleven input nodes representing six time series characteristics. The output nodes of the neural network represent nine time series forecasting methods grouped into three categories. The results indicate that the neural network approach can assist the practitioner in the selection of the appropriate forecast model.

Women business angels: Insights from angel groups

In this paper we present an intelligent decision-support system based on neural network technology for model selection and forecasting. While most of the literature on the application of neural networks in forecasting addresses the use of neural network technology as an alternative forecasting tool, limited research has focused on its use for selection of forecasting methods based on time-series characteristics. In this research, a neural network-based decision support system is presented as a method for forecast model selection. The neural network approach provides a framework for directly incorporating time-series characteristics into the model-selection phase. Using a neural network, a forecasting group is initially selected for a given data set, based on a set of time-series characteristics. Then, using an additional neural network, a specific forecasting method is selected from a pool of three candidate methods. The results of training and testing of the networks are presented along with conclusions. Copyright

The Effect of Gender Diversity on Angel Group Investment

Abstract Women have become a significant and growing financial power over the past 20 years and are developing an increasing presence in the angel market. However, there is a paucity of research on the role of women as angel investors. Do women angels have a tendency to invest in women entrepreneurs? What are the underlying incentives and motivations for women to become involved as angel investors? This survey-based research addresses these questions, and identifies some of the underlying implications of the findings on the current and future role of women as angel investors.