A review of sampling and definitional issues in informal venture capital research

This paper presents the argument for broadening the definition of informal venture capital populations and improving sampling methodologies for informal venture capital research. It is argued that the widely enumerated difficulties regarding sampling methods are driving the definition of a business angel. Sampling difficulties such as unknowable populations limit the ability of researchers to study (survey) business angels. This limitation precipitates narrow definitions of business angels in order to justify the sampling method used. The more narrow definition ultimately results in precluding various cohorts of angels from appearing in the data. This paper reviews a range of studies, their definitions and methodologies, and speculates on the angel cohorts that chosen methodologies may exclude. The paper proposes a protocol that adopts a broad definition of informal venture capital, and a sampling method that produces a more representative range of informal venture capital investors. The method samples from a known population, namely publicly available business registration data, to create a representative sample of business angels. A broad definition and a representative sampling method allow comparisons and generalisable results that current sampling methods preclude. The conclusion highlights that standardised definitions and representative samples will allow studies to make reliable comparisons across types of informal investors, such as family, friends, arch angels and microinvestors.