Talking with angels : towards a holistic perspective on angel investors’ decision-making processes

Abstract

There is a general impression in Norway that most entrepreneurs struggle to secure funding from venture capital providers, such as angel investors. Worse still, most angel research has failed to be of practical use, mainly because such studies fail to consider interdependencies in angels’ decision-making processes. This study contributes to reduce the researchpractice gap and highlight the cross-cultural context in seed capital investments. My qualitative analysis of comparative, U.S.-Norwegian data verifies past research in the Norwegian context by finding that angels employ the Affect Heuristic, Confirmation Bias, Elimination-by-Aspect Heuristic, and Availability Heuristic. Further, I expand research by discovering three novel heuristics. Firstly, angels prefer to invest within industries in which they are interested or are experts in, labeled Personal Relevance Heuristic. Secondly, Norwegian angels perceive a higher risk of product-market fit failure, because of a proposed lack of a sales mindset in Norway relative to the U.S., labeled Salesperson Heuristic. Thirdly, older and more experienced angels are more hands-on and exercise more control over investments, labeled Deference-towards-the-Archangel Heuristic. I validate my findings and interpret them within a three-stage angel investment decision-making process. Moreover, I provide practical recommendations for angels, entrepreneurs, and government. Keywords – Angel Investors, Decision-Making, Holistic Perspective, Heuristics, Seed Capital, Norwegian Context