This paper investigates the contribution provided by business angels' (BAs) post-investment intervention to the interaction between young entrepreneurial firms and bank lending decisions within the entrepreneurial finance ecosystem. The analysis relies on a data set comprising 114 Italian BA-backed firms over the 2010–2018 period, alongside 498 matched firms. We find evidence that BAs' support makes it easier for entrepreneurial firms to raise follow-on bank financing. Additionally, we document the positive effects of both BAs' entrepreneurial experience and soft monitoring. These effects can be attributed to BAs' value-added contributions and their role in mitigating information asymmetries perceived by debt providers.
Entrepreneurial Firms and Bank Financing: Do Business Angels Play a Role?
Carta, Nicola;Cavezzali, Elisa;Rigoni, Ugo
2025-01-01
Abstract
This paper investigates the contribution provided by business angels' (BAs) post-investment intervention to the interaction between young entrepreneurial firms and bank lending decisions within the entrepreneurial finance ecosystem. The analysis relies on a data set comprising 114 Italian BA-backed firms over the 2010–2018 period, alongside 498 matched firms. We find evidence that BAs' support makes it easier for entrepreneurial firms to raise follow-on bank financing. Additionally, we document the positive effects of both BAs' entrepreneurial experience and soft monitoring. These effects can be attributed to BAs' value-added contributions and their role in mitigating information asymmetries perceived by debt providers.
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