The Market Scale Of Business Angels And Its Relationship With Venture Capital In China

Business angel is an important financing channel for innovativeSMEs. Foreign studies have had diverse discussions on behavior,organization and public policy of business angel. While domestic researchon business angel is still in its infancy. This article mainly discusses aboutthe market scale of business angel and its relationship with venture capitalin China. Firstly, this article defines what is business angel and the scopeof it; then selects the appropriate sampling and estimation methods withinthe actual situation in China to estimate the market scale of businessangel in China. Also, we make analysis on background characteristics andbehavioral characteristics of angel groups in China according to the actualresearch data. In the study of relationship between business angel andventure capital in China, we use3376trading information datas of2415firms in the China Venture Source database, and then establish regressionmodels, reach the following conclusions:（1）A company that alreadyreceived funding from angels is likely to receive further funding fromventure capitals;（2）A company that already received funding fromventure capitals is likely to receive further funding from venture capitals;（3） A company that received funding from angels has a lowerprobability to achieve exit;（4） A company that received funding fromangels will go through a longer time to exit. After comparing thebackground of business angel investors and venture capital institutionswe also found that（5）there are certain inherent links between angels andventure capitals have invested the same firm. Finally, in accordance withthe relevant conclusions, the article gives some recommendations onencouraging the development of business angel in China from thegovernment public policies and some other aspects.