Why Don’t You Like Me? Angel investors’ analytical capabilities and social venture investments.
Journal
Journal of Business Venturing Insights
Type
journal article
Date Issued
2023
Author(s)
Wesemann Lekkas Henrik
;
Antretter, Torben
Abstract
While many studies on the social venture funding gap have focused on venture-level factors to ex-plain why social ventures receive less funding, the role of investors and their characteristics has re-ceived less attention. In this study, we propose that the reason for much of the funding gap is that many angel investors lack the analytical capabilities required to assess double bottom lines. Drawing on the literature on human capital in angel investing, we use data on 19,757 investment decisions by 1,428 angel investors from a large angel investment network to investigate the relationship between venture type, angel investor analytical capability, and investment likelihood. We find that the reluc-tance to invest into social ventures disappears for analytically capable angel investors (those who are relatively educated, experienced, and connected). These findings demonstrate the importance of in-vestor human capital in social venture funding and closing the funding gap.