Hans Landström, SIRE/Halmstad University, Sweden
Diamanto Politis, SIRE/Halmstad University, Sweden





Informal investors seem to be highly valuable for the growth of the firms in which they invest. Therefore, it is important to stimulate potential informal investors to make their first informal investment, and to become an informal investor. In this paper we investigate the entrepreneurial career of four informal investors. Based on the personal stories of these investors, we explore their entrepreneurial career patterns and present the central concepts belonging to the different career phases they have progressed through. The results indicate that the informal investors have experienced three overall career phases; (i) the incubation corporate career phase, (ii) the transition entrepreneurial career phase, (iii) and the integrated investment career phase. Each career phase provides the informal investors to develop valuable competencies in order to progress in their entrepreneurial career. During the incubation corporate career phase, the investors create a platform including financial preparation, management competence, network establishment, and legitimising of reputation. In the transition entrepreneurial career phase, the investors make use of this platform by applying their management competence in varying entrepreneurial projects, which in turn provides the investors to build up an entrepreneurial competence. During the integrated investment career phase, the informal investors extend the platform by making use of their management and entrepreneurial competence in the firms in which they invest, and thus behave as pure entrepreneurs as well as they make informal investments in the firms they are involved in.


The potential of the informal investors and the informal venture capital market seems to be enormous (Osnabrugge, 1998). The informal venture capital market has been identified as the largest single source of risk capital for entrepreneurial companies, far exceeding the formal venture capital industry (Mason and Harrison, 2000). Furthermore, informal investors, i.e. private individuals, who offer risk capital to unlisted companies, in which they have no previous formal or family related connections, seem to provide capital as well as sharing their business expertise with the entrepreneurs in the invested firms (Osnabrugge, 1998). In this way, informal investors seem to be highly valuable for the growth of the firms in which they invest. Therefore, it is important to increase the pool of informal investors, and stimulate potential informal investors to make their first informal investment and to become an informal investor.

In this study, we will emphasize the characteristics of informal investors as being entrepreneurs themselves, and there exists substantial evidence supporting this argument in earlier research. First, several studies have shown that the informal investors have a strong prior entrepreneurial experience (e.g. Sullivan, 1991; Mason and Harrison, 1994; Duxburry et al., 1996; Landström, 1993; 1997; Aernoudt, 1999; Feeney et al., 1999). Second, the informal investors have a desire to re-experience their earlier achievements and triumphs through the entrepreneurial firms that they finance (Gaston, 1989). Thus, as former entrepreneurs, the informal investors often have a sense of duty to support the next generation of entrepreneurs by offering them both financing and entrepreneurial competence. The driving force for the informal investors is the opportunity to start businesses and to play an active role in the entrepreneurial process (Mason and Harrison, 1994; Landström, 1997). Third, informal investors seem to have the same personal attributes (need for achievement, internal locus of control, independence, etc.) as well as motivational factors as the entrepreneurs in general (Sullivan, 1991; Duxburry et al., 1996). Finally, it is interesting to note that informal investors still consider themselves as entrepreneurs and not ex-entrepreneurs (Aernoudt, 1999). Hence, they are not merely looking to invest money but also their time, considering their investments as an extension of their own entrepreneurship (Landström, 1997). Drawing upon this evidence, the informal investors could be considered as entrepreneurs rather than financiers (Landström, 1997) looking at their investments as “subjects,” not as “objects.” Thus, we will consider the informal investors as entrepreneurs who create new business opportunities and play an active part in the entrepreneurial process. In order to understand the process of becoming an informal investor, it is interesting to study the career patterns of informal investors more deeply.


Against this background, we are interested in studying the entrepreneurial career of the informal investors and try to learn more about the specific underlying inducements and career patterns that characterize their career. Thus, we are interested in understanding informal investors as entrepreneurs from a career perspective and propose the following research question:

How do informal investors develop their entrepreneurial career over time and what inducements underlie their choice of career path?

The aim of the study is to generate new concepts and models that facilitate our understanding of the entrepreneurial career of the informal investors. In studying entrepreneurial careers, we will use a broader sense of career than merely terms of work (e.g. Arthur et al., 1989). We therefore suggest Goffman’s (1961, p. 127) definition of career that includes “any social strand of any person’s course through life.” That is, one’s career is not merely what one does in the world of work but the total experience of one’s life. Entrepreneurs usually find it difficult to set boundaries for their commitments, which means that their personal life and business life will become integrated (Johannisson, 1992). Thus, an entrepreneurial career is largely influenced by what happens in the entrepreneur’s life and family, which makes it necessary to use the broader context of career for studying and understanding entrepreneurial careers (Dyer, 1994).

The paper continues with introducing the frame of reference in which earlier research regarding entrepreneurs as individuals and their entrepreneurial careers is presented. Thereafter, our approach to the study and the method used to explore the stated question will be described. The empirical results are then presented in the fourth section by narratives from the respondents. Finally, we will discuss the empirical results and make our conclusions in order to understand and explore the complexity of the informal investors as entrepreneurs as well as their entrepreneurial career.


Considering the fact that informal investors tend to have an entrepreneurial background and thus prove a lot of similarities with the entrepreneurs, it can be assumed that these investors when making informal investments are extending their own entrepreneurship. Consequently, by doing this, they develop their entrepreneurial career.

The nature and course of an entrepreneurial career is generally considered to be a venture in unstructured and uncharted territory. Rather than climbing up a predetermined corporate ladder, the entrepreneur creates and advances in a context of their own making. Thus, entrepreneurs have the ability to create the environment and context for their own careers (Dyer, 1994). They do not have to move up in the organization since, by definition, they start at the top and, if successful, create an organizational hierarchy below them. Most scholars (e.g. Super, 1957; Hall, 1976; Baird and Kram, 1983) argue that individuals generally will experience four career stages: (i) exploration, (ii) establishment, (iii) maintenance, and (iii) disengagement. Each of these phases presents opportunities for the individual to learn, modify expectations, and change career directions. Thus, individuals pass through a career lifecycle that has distinct stages, each of which may create an opportunity to undertake entrepreneurial actions. These stages of career development are also useful indicators when assessing the opportunity to pursue entrepreneurial career paths (Harvey and Evans, 1995). Nevertheless, entrepreneurial careers reflect the changing nature of careers, in which careers across multiple firms and boundaries (Arthur and Rousseau, 1996) become more and more frequent. Traditionally, careers were thought to evolve within the context of one or two firms and were conceptualized to progress in linear career stages (Super, 1957). Now, however, the way we view careers has dramatically changed. Today, more and more individuals tend to view jumps between organizations as natural ingredients in a career (Lindgren and Packendorff, 1997), progressing in a boundaryless career. A boundaryless career is defined as “a sequence of job opportunities that go beyond the boundaries of a single employment setting” (DeFillippi and Arthur, 1996, p. 116). Some of the hallmarks of a boundaryless career include, for example, skills, knowledge, and abilities across multiple firms (Arthur et al., 1995; Baker and Aldrich, 1996), in which the work will resemble a series of projects, of temporary positions with a certain task to accomplish (Wåhlin, 1996).

Brousseau et al., (1996) have identified four essential career concepts that determine individuals’ views of their own career; (i) the linear career concept, (ii) the expert career concept, (iii) the spiral career concept, and (iv) the transitory career concept. The ideal linear career consists of a progressive series of steps upwards in a hierarchy to positions of ever-increasing authority and responsibility. The linear individual is driven by the possibility to have power and achievement and has developed competencies, such as leadership, competitiveness and efficiency. The expert is the most stabile and historically dominated career concept and consists of individuals involving lifelong commitment to some occupational field or specialty. Once the career choice has been made, the expert focuses on further developing and refining their knowledge and skills within that specialty. A less traditional view of career is the spiral career concept, which is one in which a person makes periodic major moves across occupational areas or disciplines. Ideally, these moves come every seven to ten years, a span that seems to give individuals sufficient time to develop in-depth competence. The new field draws on knowledge and skills developed in the old field, while at the same time throwing open the door to the development of an entirely new set of knowledge and skills. The transitory career is the least traditional and most variable career. The ideal transitory career is one in which a person moves every three to five years from one field or job to a very different or wholly unrelated field or area. The underlying key motives of the transitory individual are continuous variety and independence. During their career, the transitory individuals develop competencies, such as networking, speed and adaptability. An important aspect to consider is that the four career concepts not necessarily have to be isolated but be combined (which is usual) in order to be a complex, multi-dimensional, unique career profile for each individual (ibid.).

Harvey and Evans (1995) argue that there are “strategic windows” in the entrepreneurs’ career lifecycle when the opportunities to act are most favorable. The entrepreneurs are, in such circumstances, able to take advantage of these “strategic windows” by being well prepared and motivated. Thus, they possess different skill inventories (as e.g. management expertise, business “networking,” personal financial position, and communication skills) during various stages of their career lifecycle that impact their preparedness. There is not one set of skills or experiences, but rather an array of past experiences or skills needed to be a successful entrepreneur relative to the stage of the career lifecycle of the individual. Moreover, timing becomes critical, not only for the entrepreneur, but also for the environment. The distinctive competency of the entrepreneur must correspond to the market demand or there will not be a relative advantage for the entrepreneurial venture (ibid.). It should also be noted that, whereas the entrepreneur finds him/herself at one of their career “critical junctures,” this does not mean that they should take entrepreneurial opportunities. For example, there may be personal reasons such as: (i) lack of funding, (ii) debt obligations, (iii) family commitments, and the like. The important issue in this respect is that there are times when the window is open if the individual is prepared and motivated. Just as learning should be a lifelong process, entrepreneurship should be viewed as a career long opportunity.


The selection of the respondents studied involved some pre-analysis of the results from a previous survey study of informal investors in Sweden (Landström, 1997). A mapping of the informal investors was made in which four types of informal investors could be distinguished with regard to their experiences of financial investments as well as starting and running their own businesses (what we call entrepreneurial experiences). The first informal investor has considerable entrepreneurial experience and considers the enterprising as the dominant occupation. The second one acted as the opposite, i.e. has considerable experience of making financial investments, while the enterprising is rather a spare-time activity. The third investor has a large entrepreneurial experience as well as financial investment experience, while the fourth has a limited experience of both entrepreneurship and financial investment activities. Though the differences concerning the informal investors’ background we may expect that they have some similarities concerning their entrepreneurial career patterns. By investigating different types of informal investors we expect to cover a larger spectrum when identifying the common career patterns experienced by the informal investors.

In our study we use the perspective of the informal investor in order to emphasize the respondents’ owns stories. In-depth interviews with the investors were conducted in order to understand the complexity of their entrepreneurship. All interviews (four interviews with each respondent) were tape recorded and transcribed verbatim in order to capture the informal investors’ own values and conceptions about their entrepreneurship and career. The interviews lasted from 1 ½ to 2 ½ hours, and, in total, the interviews covered approximately 35 hours. The interview was a form of “life history,” in which the respondents were asked to recall motives and circumstances surrounding their actions and the development of their career. The interview moved on to probe core issues of why each career change was made and how they considered their own role in their entrepreneurial career.

We have used NUD*IST as a technique for analyzing the data. NUD*IST is categorized as a “code-based-theory-building” program (Weitzman and Miles, 1995) designed to store, code, retrieve, and analyze texts. A code-based theory-building program provides possibilities for the researcher to divide text into segments and to store that segment under a certain name, a code. The link that is created between the text and the code is then maintained in order to make further analysis possible. A code can be searched for and retrieved from the text. Furthermore, the program provides additional functions that make theory building possible, e.g. by making connections between codes in order to develop more abstract categories. In our analysis, the recorded transcripts from the interviews have been coded and stored under different names related to the respondents’ experienced career phases. Each career phase then includes a number of concepts that are central and common to the respondents in the study and that characterize their entrepreneurial career. Furthermore, we emphasize the subdivisions connected to each central concept in order to facilitate a deeper understanding of their entrepreneurial career patterns. An important aspect in this connection is the program’s ability to support model building.

As we see it, there are three major aspects that make our research approach both interesting and valuable for our purposes. First, the qualitative analysis responses may allow the investors to describe their own impressions in appropriate detail using their own words. The main advantage of letting the informal investors tell their own story is that structure and logic derive from the respondents. Thus, it is the respondents that determine what is important, not the researcher. Second, it provides possibilities to generate extensive and contextual data that can contribute deeper insights into informal investors as entrepreneurs and their entrepreneurial careers. The possibilities to secure rich descriptions of the social world (Denzin and Lincoln, 1994) are of great importance because they are the raw material from which interpretations are made. However, there are some problems associated with this kind of qualitative method. For example, the interviews may provide opportunities for the respondents to rationalize success or failure to provide a forum for reinforcing self-esteem and, as an indirect means, to access further support. In this way, each narrative produces coherence and meaning out of an ambiguous reality. However, since we experienced a great openness and confidence-inspiring relation with the respondents, we might assume that rich and truthful information was obtained about the informal investors in our study.


The Respondents

At the beginning of Arnold’s career, at the age of 22, he worked with development projects concerning automatic control engineering but soon discovered that the tasks he handled were quite difficult to master. Therefore he decided to continue his education as an engineer. After his university education, he received an offer from his former employer to take part in the building of the first transistor computer in Sweden, which he found very interesting. Then, one appointment followed the other and Arnold did not need to worry about searching for new jobs. Thus, Arnold progressed relatively fast in his career and earned a position as executive for the R&D department already at the age of 32. Nine years later, he became the CEO of the company and stayed in this position until the company became subject for an acquisition involving a re-appointment of the CEO post. Arnold experienced the situation quite uncomfortable but he also considered it as adequate opportunity to do something else in his life. Therefore, he decided to leave his corporate career for starting his own business as a consultant at the age of 50. A main task as consultant has consisted of helping entrepreneurs to start-up different development projects mainly building on data technology. Moreover, Arnold had, because of his position as CEO, acquired a great deal of experience in management and, thus, contributed strategic competence in the firms he was involved in. His entrepreneurial activities have often involved starting up different data-technology based firms, in which he took the position of CEO or as a board member. At the same time, he made a financial investment in the firm. Many of his consulting assignments are the result of recommendations by word of mouth, when someone in Arnold’s personal network or an acquaintance has contacted Arnold for advice and help. Today, 70 years old, he is only a member of one board, spending most of his time with his family. A central theme for Arnold’s career has been to pursue different entrepreneurial projects, creating something out of these projects by contributing with strategic and management competence, and then, going on the next project.

Bill is a person that foremost has focused his career on financial investments. He started his career at the age of 24, by working as an elementary-school teacher during five years. Then, he took a career decision when he received an offer from a friend to work as an insurance salesman. This job seemed to fit Bill very well and after only two years he became sales manager and four years later on area manager, and finally divisional director at the age of 38. His work in the insurance industry opened up great chances to earn money as well as allowed him independence concerning work assignments compared to his teaching post. Furthermore, he had gained a good insight into the industry and established a well-developed network during his years as manager. A main trigger that influenced Bill’s decision to start his own business as an insurance consultant was the administrative tasks connected to his last position as executive, which did not meet Bill’s expectations and wish to work near the industry and to solve challenging problems. As a divisional director he had more administrative tasks, which did not stimulate him, and finally he quit his job at the insurance company. Besides, he wanted to try something else to work with and considered himself to have sufficient competence and experience, which enabled him to offer the same services as an independent consultant. Not long after he quit his job Bill bought his first business. He gradually made some additional financial contributions to the business by refraining from withdrawing salary in order to allow him to make financial investments in the future. His work as a salesman and manager had given Bill a good insight into various industries, knowledge that was useful when he wanted to invest in different business areas. Today, at the age of 66, Bill is still active making financial investments and expanding his entrepreneurship. He mentions that, despite his age, he does not have any plans to cut down on his commitments, because of the fun of making business. A central theme concerning Bill’s career is the matter of making use of the opportunities that arouse and strive to continuously enhance the firm’s performance.

Carl started his career as a company lawyer after having finished his law degree at the age of 27 years. As a company lawyer he analyzed different prospects concerning patents rights, trademark rights, innovations and new technology developed by different entrepreneurs and inventors. Very soon, Carl realized the great variety and large numbers of prospects available globally, requiring both financial capital and competence. During his time as a company lawyer, Carl became more and more involved in different entrepreneurial projects. He often helped the entrepreneurs in the start-up process by being a board member, which gave him considerable experience in the process of entrepreneurial start-ups. After some years, his workload as a company lawyer became too large. In addition, his work situation had become a matter of routine rather than a challenge. Thus, at the age of 39, Carl decided to leave his employment in order to start his own lawyer’s office together with a former student friend. His entrepreneurial commitments involved in several entrepreneurial start-ups helping inventors and entrepreneurs with juridical and strategic competence in order to commercialize their products and get hold of valuable contacts containing potential informal investors. Rather soon he also made his first informal investment, which was a co-investment together with some other informal investors. Today, at the age of 64, Carl is still active in a dozen entrepreneurial projects and mentions that he does not have any plans to make further financial investments, mostly because of saturation and lack of time. Some central concepts regarding Carl’s career are his genuine juridical competence, strategic skills, and experience in making informal investments in which he easily attract others informal investors to co-invest.

At the age of 26, David got his first employment as a marketing manager in a large family business. Ten years later, he got a new position, also this as marketing manager in a family business. At the age of 41, he became the CEO in another large family business for ten years, and then he became chairman in the company. At this moment, David was forced to choose between continuing his career as an employee in yet another company or to start his own business. There were mainly two situations that motivated David to start his own business at this time. First, because his economic responsibility for supporting his family had been reduced. Second, the fact that he wanted to change his work situation, largely because of the conflicts occurred previously at his work place, but also because he started to feel that his work situation was no longer stimulating. Furthermore, David felt that, during his twenty-five year-long working life, he had created a genuine platform of business skills, managerial experiences and a well-developed network. This made him take the final decision to start his own business. David started a consulting firm together with four partners with the aim of developing the work of boards of directors in Sweden. During his career, David has been involved in several businesses either as a consultant, board member, or both. When David was 65 years old, he decided to decrease his entrepreneurial engagements and considered doing other things in his life that did not demand the same high speed as the enterprising did. Today, he is almost completely retired with the exception of two board assignments. The most common theme regarding David’s career is to play a vital role in the entrepreneurial firm, and by that, be able to participate in a creative and entrepreneurial process.

Key Concepts Concerning the Entrepreneurial Career of the Informal Investors

Analyzing the stories from the respondents (see Appendix), we identified several common key concepts concerning the different phases that they had progressed through in their entrepreneurial career. As can be seen, the entrepreneurial career of the informal investors consists of three overall phases; (i) the incubation corporate career phase, (ii) the transition entrepreneurial career phase, and (iii) the integrated investment career phase. Each phase includes some central concepts characterizing the entrepreneurs’ specific entrepreneurial career patterns. An interesting aspect, in this respect, is the informal investors’ inducements for changing their career path to a new phase of their entrepreneurial career, i.e. the transition between each career phase that stimulates the informal investors to change their career situation. However, the following entrepreneurial career model that will be presented is complex in at least two ways. First, the integrated investment career phase seems to involve an indistinct borderline between being an entrepreneur and an investor. This means that the informal investors often extend their own entrepreneurship in the firms they are involved in as well as they decide to make their informal investments in some of these firms. Second, the career transitions take place in different ways. The entrepreneurial window, i.e. the transition from the incubation corporate career phase to the transition entrepreneurial career phase seems to occur momentary, while the subsequent career transition towards the integrated investment career phase rather happens more sliding.

Below we will present each career phase and transition from the entrepreneurial career model, including the common key concepts and their subdivision concepts (see Figure 1). A sum up regarding the number of respondents that have mentioned the different concepts and the number of text units that have been coded to each concept is presented in the Appendix.

There seems to be an incubation corporate career phase including the concepts basic security, work experience, and network, which prepare the informal investor for entering the transition entrepreneurial career phase. The feeling of having a financial basic security of employment in the early career phase seems to be essential to the informal investor. They have a need to secure the economic situation of their family, which is mainly seen as a duty by the informal investor. Another important aspect of having experienced the incubation corporate phase before starting an own business is the value of gathering important work experience in order to use these experiences and competencies later on as an entrepreneur. The investors studied all have experience as managers or CEOs, which has been valuable when they started their own business as a consultant. Thus, the transition to the entrepreneurial career phase seems to be natural and closely linked to their early work experience. The incubation corporate career phase has also implied an opportunity for the investors to create a well-developed network that supported them in future financial investment opportunities during their subsequent career phases. These networks include friends and business colleagues to the informal investors as well as membership in different network organizations that they consider being valuable in their career.

The entrepreneurial window, i.e. the transition from the incubation corporate phase to the transition entrepreneurial phase is, to a large extent, connected to the lack of new challenges in the existing work situation as well as a triggering event that finally causes the investor to change career path. But it is also a perception of possibilities to find new opportunities. Concerning lack of new challenges, the respondents mention the importance of reconsidering their work situation from time to time. This situation arose at a time when the investors had determined to leave their employment, largely due to experiencing their work situation as a routine. Still, atriggeringevent is needed that makes the investor leave the incubation corporate phase and enter the transition entrepreneurial phase. This triggering event can be a conflict on the last job or that the investor is dissatisfied with his current work situation.

When entering the transition entrepreneurial career phase, the informal investors seem to have some common career patterns concerning their first start up, the way they got involved in different entrepreneurial projects, and how they prepared themselves for entering the subsequent career phase. There seems to be a natural transition from being employed to an entrepreneurial oriented career in which the informal investors offer management-for-hirebased on earlier experience and competence acquired in the incubation corporate career phase. Most of the consulting assignments involves both management and strategic competence, and have implied the informal investors playing an active role in the businesses they served either as a board member or as CEO. Moreover, they seem to be comfortable working with varying entrepreneurial projects, where the informal investor had been asked by friends to assist in the development of their businesses. The well-developed networks have often been built during the incubation phase, in which the informal investors have created a good reputation by word of mouth. A good reputation made it easier for the investors to receive a board assignment or a CEO position in the businesses they had served. The recommendations by word of mouth also imply facilitation for the informal investors to create valuable contacts for the entrepreneurs. The incomes earned from the consulting remunerations involve possibilities for the investors to make incremental savings, and thus provide a financial platform for making future financial investments. Thus, the consulting firm served as a natural entry to the integrated investment career phase, implying a limited initial capital in the start-up phase.

A prime motive for making the first informal investment is the emotional commitment the informal investor makes when working with the entrepreneurial firm. Thus, the investment transition is an overlapping process, in which the informal investors already have some contact with the entrepreneurial firm they intend to invest in. The fact that there is an overlapping transition from the transition entrepreneurial career phase to the integrated investment career phase makes the borderland between these two phases fairly blurred. The informal investors can, in some respects, behave as pure entrepreneurs by working with their entrepreneurial projects as well as decide to make financial investments in the businesses in which they had worked. A central motive for making financial investments is the emotional commitment they feel when working with the firm, where the informal investors want to help the firm by contributing both financing and competence.

When entering the integrated investment career phase, i.e. an integration between entrepreneurial and investment activities, the informal investors seem to focus on three aspects; having an entrepreneurial participation in the invested firm, having an influence on the business, and gaining both profitability and intrinsic rewards. Ownership generates a feeling of psychological satisfaction, in which the investors have a sense of increased entrepreneurial participation in the business activeness by playing a vital role in the invested firm. It is often a matter of being on equal terms with the owners, where the investors not only contribute competence and financing but also extend their entrepreneurship by diffusing the entrepreneurial team spirit in the invested firm. Moreover, it is important for the investor to be able to influence the business course direction, making investments only when the size of the investment plays a vital role for the business. This has to do with their standpoint of contributing not only money but also their entrepreneurial experience. Even if the informal investors aim to attain an active entrepreneurial involvement in the invested firms, the profitability aspect is not minimized. Nevertheless, they take a relatively long-term view of the profitability requirements, which means that their primary motive is to participate in the entrepreneurial process and to contribute competence, knowledge, and skills, in order to develop the business. Thus, there is, besides the financial gains aspect, a kind of intrinsic reward such as, for example, self-confidence, creativity, meaningfulness, fun and satisfaction, which emotionally stimulates the informal investors to make informal investments.

Although the informal investors show an excessive involvement in their entrepreneurial firms, there comes a time when they decide to de-escalate their entrepreneurial career making the phasing-out. Two central motives for phasing out their career seem to be the feeling of saturation and the aspiration of experiencing enjoyment outside their working life. With increasing age, the informal investors became more and more fastidious about their choice of new projects, indicating routine, and saturation of their commitments. This “psychological” saturation creates the feeling of being less ambitious concerning their entrepreneurial commitments. Furthermore, they emphasized the possibility of living a more “friendly and social” life outside their working life doing something else and thus achieving enjoyment together with their family. However, the phasing-out is a slow process and the integrated investment career phase is rather hard to abandon. It is foremost their age and health that restrict their entrepreneurial involvement.


The results of the study point out that the informal investors have experienced three overall career phases; (i) the incubation corporate career phase, (ii) the transition entrepreneurial career phase, and (iii) the integrated investment career phase. Some conclusions can be drawn regarding the phases (see Figure 2).

The “incubation corporate career phase” has provided the investors to gather valuable work experience in which their management competence seemed to be applicable in the subsequent career phases. They have all worked as managers in large organizations indicating a hierarchic career base. Furthermore, they have all stressed power as a central driving force, which reflects their linear career paths (Brousseau et al., 1996). The informal investors have during their corporate career been able to create a platform including financial preparation, competence building, network establishment, and legitimizing their reputation (Mason et al., 1991; Duxburry et al., 1996; Mason and Harrison, 1996). This platform has been valuable for them in order to progress in their entrepreneurial career. Hence, the competence base in the “incubation corporate career phase” has mostly involved building up their management competence.

The informal investors has entered the “transition entrepreneurial career phase” by starting the first business as consultants, which has provided them to use their management competence acquired in the corporate career. A main motive that has been expressed for their entrepreneurial commitments is freedom implying an opportunity to create the environment and context for their own careers (Dyer, 1994). Most of their entrepreneurial commitments have arisen from recommendations by word of mouth indicating their orientations towards networking. The investors have developed their entrepreneurial career by making use of the platform created in the corporate career. This by applying their management competence in varying entrepreneurial projects, which in turn has provided the informal investors building entrepreneurial competence. Their career paths can be described as spiral (Brousseau et al., 1996), in which the informal investors contribute experience and competence gathered in new areas, i.e. in the entrepreneurial firms they are involved in.

The first informal investment was made really soon after having started their first business, indicating that the informal investors´ entrepreneurial commitments as consultants served as a natural entrance to the “integrated investment career phase.” A central motive for making informal investments is the possibility to have an entrepreneurial involvement in the invested firm. The informal investors has extended the platform by making use of their management and entrepreneurial competence in the firms in which they have invested in, and thus behaved as pure entrepreneurs as well as they have made their informal investments in the entrepreneurial firms. The informal investors indicate a project view of their career (Arthur et al., 1995; Wåhlin, 1996) in which they feel comfortable in having a variety of career conditions, and thus, choose new career paths mainly for the excitement to do something new and to utilize their management and entrepreneurial skills in new projects.

Looking at the career transitions we can conclude that the “entrepreneurial window” has taken place in a momentary way, in which a triggering event has influenced the informal investors to change their career path into the transition entrepreneurial career phase. Such triggering event has been necessary in order to create a change in the investors’ career situation, i.e. a juncture that transforms an intention to an actual behavior (Shapero and Sokol, 1982). This triggering event has been either a conflict in their work or another dissatisfaction concerning their working situation. The informal investors have also experienced their working situation as routine and therefore decided to leave their employment in order to start an own business as consultants. The point of time selected for leaving the corporate career has been appropriate for the investors, and thus, they experienced a moment when the “entrepreneurial window” (Harvey and Evans, 1995) opened up adequate opportunities for entering the entrepreneurial career phase.

Furthermore, the “investment transition” seems to be of sliding nature reflecting the indistinct borderland between being an entrepreneur and an investor. Thus, they have a dual role in the entrepreneurial firms by being entrepreneurs as well as informal investors at the same time. This situation also promotes the emergence of trust between the entrepreneur and the informal investor in order to create valuable investment opportunities. In this connection, the informal investors are prepared and motivated when the investment occasions arise. Although financial gains may be a prime motive for making informal investments, the fun and satisfaction gained by their involvement is, nevertheless, an additional important factor when investing in entrepreneurial business (Mason and Harrison, 1994; 1996). Another important aspect of becoming a joint-owner, mentioned by the informal investors, is the possibility of having a larger influence on business performance and direction, which in turn enhances their business responsibility in the invested firm. This also indicated that the informal investors tend to perceive their investments as both an “object”—a financial placement—and a “subject”—where the prime motives to invest is the chance to create business opportunities and a desire to participate in the process.

The research will give implications for policy in different ways. For example, one way of increasing the pool of informal investors would be to educate potential investors in making informal investments and expanding their business and entrepreneurial skills. In such a learning process, the knowledge about how the informal investors develop their entrepreneurial career is of great importance. As the results indicate, it is considerably more complex to stimulate potential informal investors than merely providing tax deductions or institutional networks for business angels. It is rather a matter of changing the attitude regarding informal investments and make use of the available competence that exist in the corporate career. The matter of having a formal position as CEO or other managerial post has a legitimizing aspect for the investors and that create trust on the macro level, i.e. in the business society. This in turn facilitates for the informal investors to establish a quantitative network, which seem to be essential in order to progress in their entrepreneurial career. Moreover, the informal investors as individuals have a relatively informal personality making it easier for them to create trust on the micro level, i.e. in the specific firm they are involved in. The sense of creating trust on the micro level seems to be essential in order to create investment opportunities in the firm.

In this study we have focused on the development of the entrepreneurial career through the perspective of the informal investor, and thus, provided a possibility to get a closer picture of the studied phenomenon. In this respect we will indicate that learning seems to be important. Therefore, future research should continue examining the informal investors’ view from a learning perspective. By focusing on how the informal investors learn from their entrepreneurial actions we might get a more comprehensive view of their entrepreneurial career. Also, by using larger samples we might get more reliable results to extend our knowledge of the informal investors’ entrepreneurial career. Thus, it would be interesting to further investigate whether the central concepts that have been found in this study are possible to identify in a larger sample.

CONTACT: Diamanto Politis, SIRE/Halmstad University, PO Box 823, S-301 18 Halmstad, Sweden; (T)  +46 35 167100;


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