Business Angels' Smart Money: evidence from the Italian ecosystem

The Italian informal venture capital market has steadily grown in terms of number of reported investments over the last decade. The worldwide and Italian panorama is becoming more and more interested in the entrepreneurial world of startups, despite the financial crisis of the recent years. Investments required for the growth of a startups are initially undertaken on a personal finance basis, followed by the second round of investment received from Business Angels. This kind of partnership will bring greater value to the company – when properly used. The Business Angel market is very heterogeneous, made up of high-net-worth individuals who invest a portion of their wealth in high-risk and high-reward businesses. Originally, Business Angels operated anonymously. In the late 1990s, they began organizing themselves into groups to invest collectively, which resulted a more efficient modus operandi. Business Angels also invest for non-financial purposes, wishing to be involved in the management of the enterprises they invest in. Called "Active Angels", these investors offer extra-monetary services to improve the management of the company, so that they may act in an advisory role. On the other hand, investors that do not offer additional services are called "Passive Angels". The purpose of this thesis is to map the Italian Business Angel ecosystem, focusing on the identification of the Smart Money Business Angel profile. Therefore, the aim to understand the main differences between Active and Passive Angels.