The presence of angels among early-stage financiers of new technology-based firms should improve chances of eventual venture capital financing. Reasons to expect that firms with private investment would have easier access to venture capital are discussed. This study presents findings that support this expectation. A total of 57% of the firms that had received private investor financing had also received financing from institutional venture capitalists; only 10% of firms that had not received angel financing obtained venture capital. Angel investor financing was a significant explanatory variable (among others) of differences between venture capital recipients and firms that had not received venture capital. It would appear that angels help firms to become more ready for future stages of investment by, among other contributions, being closely involved with the firms in which they invest. They usually provide advice and networking opportunities. They also serve on Boards of Directors and Advisors, and provide hands-on assistance and business intelligence. Angels also fulfill an important accreditation role. Overall, this study provides empirical support for the expectation that involvement of angels can substantially increase the attractiveness of firms to institutional venture capitalists.

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Keywords Angel-founder relationships, Angels' preferences, Business angels, Non-financial contributions, Technology SMEs, Venture capital
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Journal Venture Capital
Madill, J.J. (Judith J.), Haines Jr., G.H. (George H.), & Riding, A.L. (2005). The role of angels in technology SMEs: A link to venture capital. Venture Capital, 7(2), 107–129. doi:10.1080/1369106042000316341