Entrepreneurs' network characteristics and their perceived success in raising equity: Evidence from the business angel market

Objective: The article investigates the nexus between the characteristics of entrepreneurs' networks and their perceived success in attracting funding from business angels. Research Design & Methods: The article is based on a quantitative study. The data source was a survey of 40 Polish early-stage ventures that had secured angel funding. The ventures were identified by searching the Crunchbase database and the websites of Polish business angel groups. Several methods were used in the article: the chi-square test of independence with correction for Yates' continuity, the one-tail Fisher exact test, and Spearman's rank correlation coefficient. Findings: The research results indicate that network size, contact frequency, and relationship quality are associated with entrepreneurs' perceived success in raising capital from business angels. It was also found that there are differences in the potential of entrepreneurs' network ties to contribute to this success. The results prove that more experienced entrepreneurs, in particular, are able to use their networks to facilitate their success in attracting angel funding. Implications & Recommendations: While networks are generally perceived as beneficial, the article shows that maintaining and developing relationships with specific actors, in particular with business advisors, mentors, external equity investors, as well as lawyers, can be important for the success of a venture when seeking external equity funding. This may provide an incentive for entrepreneurs to strategically build network relationships that are effective and useful when raising capital from business angels. Contribution & Value Added: While previous studies have not quantified the role that entrepreneurial networks can play in securing angel funding, this article makes an important contribution by providing empirical evidence on how entrepreneurs perceive their networks as useful in meeting their needs when raising equity from business angels.