The Angels’ Share: Ownership Structure, Family Financing, and Entrepreneurial Performance

To advance the limited research regarding the effects of informal, individual-type investments on new ventures, this study investigates the impact of the angels’ share–the angel investors’ proportion of ownership at a given time–on entrepreneurial performance. Using logics from agency and relational theories of trust and control, we theorize that below the blockholder level of ownership, the angels’ share is associated with greater innovation but lower revenue growth. In contrast, we expect that above the blockholder level of ownership, the angels’ share leads to lower innovation but higher revenue growth. We speculate that those effects are predicated on whether the new venture is family financed, since the trust dynamic of family can alter investor-investee relationships. Leveraging a longitudinal sample of U.S based new ventures, our results support our theory and suggest that regimes of passivism and activism shape the impact of angels’ share on entrepreneurial performance. The findings also highlight how family financing and angels’ share interact in new ventures, while providing practical insights for entrepreneurs in the market for new resources.