Linear and nonlinear determinants of the performance of informal venture capitalists' investments: an empirical analysis

This paper is aimed at identifying and analyzing the contribution of the major drivers of the performance of informal venture capitalists’ investments. This study analyzes data on Italian transactions and personal features of Italian Business Angels gathered during 2007 – 2011 with the support of IBAN (Italian Business Angels Network). The econometric analysis investigates the returns of business angels’ investments and their major determinants (industry, exit strategy, experience, holding period, rejection rate, year of divestiture). The major results are the followings:1) differently from previous literature, the relationship between Experience and IRR is quadratic and significant; 2) for the first time, is confirmed by quantitative data that short Holding period (below 3 years) earn a lower IRR; 3) the Rejection rate is logarithmic and the impact on IRR is positive and significant. Finally, the outcomes of the empirical analysis performed in this study allow identifying new and concrete insights on possible policy interventions