Enabling factors
396. For the angel investment model to work and the market to grow, a well-functioning
entrepreneurial ecosystem is needed (OECD, 2011a). Similarly to the VC sector, BAs need a critical mass
of high-growth opportunities, to screen and select appropriate ventures and scalable business models.
Therefore, a diffused culture for risk-taking, social recognition for an entrepreneurial career, low barriers to
market entry by new entrepreneurs and high levels of appropriability of the returns from innovation are all
factors that favour opportunities for angel investment to emerge. Also, access to knowledge and skills for
entrepreneurs to launch innovative businesses is crucial. These are not confined only to high-tech sectors,
for which good linkages with R&D centres and Universities are essential, but may concern traditional or
mature industries, in which opportunities to rapid growth may exist for innovative start-ups.
397. Angel investing benefits from an integrated and well-functioning financial system, which allows
profitable exit to take place, through IPOs or trade sale. In this respect, secondary stock markets in which
SME shares are traded can provide an important channel for BAs to realize their investments. A welldeveloped VC market can also provide BAs with an effective exit route.
398. Angel activity benefits from broader synergies with the VC industry. BAs need a wellfunctioning VC market to provide the follow-on finance that some of the businesses they support will
require. At the same time, a well-developed angel market can create more investment opportunities and
increase the deal flows for VCs (Harrison and Mason, 2010).
399. Awareness about angel investment opportunities is relevant for the growth of the industry, to
attract would-be BAs and to raise the interest of entrepreneurs that seek early-stage funding. In many
countries, the development of BANs and online platforms has improved the visibility of the angel market
at the local level and reduced the information gap between angel investors and entrepreneurs. Until
recently, entering a deal with a BA was often a challenge for entrepreneurs, which had to work their
personal networks to identify and meet potential financiers and then negotiate privately. The match-making
services offered by BANs can substantially reduce the search costs and time and increase the likelihood
that valuable projects get financed. The visibility of the industry has also improved with the diffusion of
angel groups or syndicates, which are generally easier to find for entrepreneurs than individual angel
investors (OECD, 2011a; Ernst &Young, 2014).
