On the structure of the informal venture capital market in Sweden: developing investment roles

Abstract

This paper has two objectives: first, to estimate the size of informal venture capital market in Sweden, and second, to explore the heterogeneity of informal investing behaviour. Based on quantitative data on 278 informal venture capital investors and 422 investments, this paper provides an estimation of the size of the informal venture capital market in Sweden and an analysis of its structure by making a categorization of informal investors' investment roles. Four investment roles are identified based on the level of contribution of financial and human resources in the investment situation. The results show that the investment role that an individual assumes in the informal venture capital investment situation is dependent on the availability of the financial and human capital resources, as well as factors related to the willingness to supply them. The actual resource requirements of the firm have been shown to be of less importance in explaining the investment behaviour.