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The geography of business angel investments in the UK : does local bias (still) matter?

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Cowling_2021_EPA_Geography_CC.pdf (412.7Kb)
Date
20/01/2021
Author
Cowling, Marc
Brown, Ross
Lee, Neil
Keywords
Entrepreneurial finance
Business angels
Equity investment
Local bias
Public policy
HG Finance
3rd-DAS
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Abstract
Business angels (BAs) - high net worth individuals who provide informal risk capital to firms - are seen as important providers of entrepreneurial finance. Theory and conventional wisdom suggest that the need for face-to-face interaction will ensure angels will have a strong predilection for local investments. We empirically test this assumption using a large representative survey of UK BAs. Our results show local bias is less common than previously thought with only one quarter of total investments made locally. However, we also show pronounced regional disparities, with investment activity dominated by BAs in London and Southern England. In these locations there is a stronger propensity for localised investment patterns mediated by the “thick” nature of the informal risk capital market. Together these trends further reinforce and exacerbate the disparities evident in the UK’s financial system. The findings make an important contribution to the literature and public policy debates on the uneven nature of financial markets for sources of entrepreneurial finance.
Citation
Cowling , M , Brown , R & Lee , N 2021 , ' The geography of business angel investments in the UK : does local bias (still) matter? ' , Environment and Planning A , vol. Online First . https://doi.org/10.1177/0308518X20984484
Publication
Environment and Planning A
Status
Peer reviewed
DOI
https://doi.org/10.1177/0308518X20984484
ISSN
0308-518X
Type
Journal article
Rights
Copyright © The Author(s) 2021. Open Access. This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages (https://us.sagepub.com/en-us/nam/open-access-at-sage).
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  • University of St Andrews Research
URI
http://hdl.handle.net/10023/21301

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