Frontiers of Entrepreneurship Research
1996 Edition


THE RETURNS FROM INFORMAL VENTURE CAPITAL INVESTMENTS:
SOME EVIDENCE FROM FINLAND

Annareetta Lumme, Kera Ltd, Helsinki, Finland
Colin Mason, University of Southampton, Southampton, UK
Markku Suomi, Helsinki University of Technology, Helsinki, Finland


Introduction
Methodology
Active Business Angels in Finland: An Overview
Exit Activity

Table 1: The Perfomance of Informal Investments from Which Business Angels Had Exited
Table 2: Exit Routes
Table 3: Exit Routes by Finnish Venture Capital Funds
Table 4: Anticipated Exit Routes for Current Portfolio

A Comparison of "Successful" and "Unsuccessful" Investors

Table 5: Work Experience of Successful and Unsuccessful Investors
Table 6: Number Of Investment Opportunities and Number of Investment Made

Conclusion
References


ABSTRACT

Despite the recent increase in research on informal venture capital there are many aspects of this market for which no information exists. One such issue is exits. This exploratory study is the first to address these issues. It is based on a survey of 38 active business angels in Finland who had made a total of 155 investments; 20 of these investors had made 49 exits. Two aspects are addressed. First, evidence is presented on investment performance and the timing and method of exit. Second, the paper explores differences between those investors with a successful track-record of exits and those with an unsuccessful track-record. Differences are identified in terms of motivations for investing, volume and sources of information on investment opportunities, prior relationship with investee businesses, perception of value-added and employment background. However, such conclusions should only be regarded as suggestive in view of the small numbers involved.

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Last Updated 4/12/97 by Cheryl Ann Lopez & Dennis Valencia

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