Munich Personal RePEc Archive

When Entrepreneurs Meet Financiers: Evidence from the Business Angel Market

Angela, Cipollone and Paolo E., Giordani (2016): When Entrepreneurs Meet Financiers: Evidence from the Business Angel Market.

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This paper estimates the process of search and matching between entrepreneurs and financiers in the business angel (BA) market. We hand-collect a new dataset from the BA markets of 17 developed countries for the period 1996-2014, and we estimate the aggregate matching function, which captures the number of successful deals as a function of the number of potential entrepreneurs and of business angels. Empirical findings confirm the technological features assumed in the theoretical literature: positive and decreasing marginal returns to both inputs (stepping on toes effect), technological complementarity across the two inputs (thick market effect) and constant returns to scale (CRS). As we show, evidence on CRS rules out equilibrium multiplicity in the BA market. We discuss the policy implications of these findings.

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