A Literature Review and Industry Analysis of Informal Investment in Canada: A Research Agenda on Angels

7. Appendices

7.1 Index

End Notes

^{Footnote 1} A simple average of the numbers produces an average of greater than $75,000. However, the distribution of the responses includes a small number of large investments which inhibits inference to the larger population of angels because the responses do not follow the "normal distribution curve." Converting each response to its logarithm (a standard technique) produces a normally distributed curve which, when averaged and re-converted, produces a more inferential statistic.

^{Footnote 2} Languedoc is reporting on a study co-authored by Rod McNaughton, then a student at the University of Western Ontario, for the Association of Canadian Venture Capital Companies.

^{Footnote 3} Ducros (1993) makes an argument for a "critical mass of investors knowledgeable in information technology."

^{Footnote 4} For a detailed recent discussion of agency issues explored at the angel-investee level see van Osnabrugge 1998.

^{Footnote 5} For a personal biography of Jim McCambly, the persuasive labour leader who convinced governments to create the tax incentives, see Mayer, A. (1996, December 15). A $600 million man: It was labour leader Jim McCambly who persuaded Ottawa to launch a huge capitalist venture backed by tax credits. The Toronto Star.

^{Footnote 6} The most recent doctoral dissertation in the area of informal investors (van Osnabrugge 1998 from Oxford) used the venture capital decision making process (Tyebjee and Bruno 1984) as a template for his investigation, but did not involve any search activities.

^{Footnote 7} The entire proceedings of their seminar is included in the accompanying references.

^{Footnote 8} The developments in this stream of the wo rld wide literature are substantial.

^{Footnote 9} Quote made by Ned Macaulay.

^{Footnote 10} The University of Calgary's MBA students have an average of six years business experience before returning to school implying a fair degree of maturity as well as taking the edge off of naivety.

^{Footnote 11} The author is currently considering the literature regarding this area as a stream of future research.

^{Footnote 12} For a review of what researchers had to do to get accurate reports of formal venture capital returns, see Bygrave, Fast, Khoylian, Vinvent and Yue's (1989) account of American returns' reporting by venture capital companies.

^{Footnote 13} The spectacular $10 billion acquisition of Newbridge Networks by a French telecommunications company was announced just at the time of this writing.

^{Footnote 14} At the time of this writing, the Atlantic Region work was rep licated to add precision to the findings. The results were very similar to the original findings: about a third of investors made investments to family, about a third of investors lost a total investment to bankruptcy or failure, about 10 percent of angels were women, and about 15 percent of the companies formed in the Region indicated having funding from individuals outside the entrepreneurial team.

^{Footnote 15} To some extent, they do not have to be. It is widely recognised that VC hurdle rates are as high as they are because they must compensate for the losses (bankruptcies and total failures) and the living dead (viable businesses that are not expected to produce to the venture's expectations).

^{Footnote 16} A finding of the federal government's small business working committee report, Breaking Through Barriers: Forging our F uture, as reported in Peterson, R. (1998). How is entrepreneurship different in Canada? The Financial Post, March 4.

^{Footnote 17} Individual comments in study of swift trust by Mason et al.

^{Footnote 18} Agency theory is concerned with the relationship that exists between a principal (the angel) and their agent (the investee) and the agent's motivations and incentives to act in the principals' best interests.

^{Footnote 19} Rick Norland, an investment intermediary, suggests entrepreneurs plan to spend 85% of their time over a six- to 12-month period when looking for angels. One of the key elements in this discussion is who will oversee the firm as the entrepreneur's attention is diverted from the firm (Riding 1997).

^{Footnote 20} The authors doctoral dissertation has approximately 300 academic references all related to developments in informal investment and angels.

^{Footnote 21} At the time of this writing, the preliminary results of a follow-up study about informal investment in Atlantic Canada confirmed earlier research that approximately one-third of informal investors lose at least one investment in its entirety.

^{Footnote 22} The following lists do not contain web sites found, press articles employed, or general interest or specialised magazine publications. Lists of these sources follow this section. This list of references contains only the canadian journals and reports as they are normally only those that enlist original research. The list of non-Canadian sources follows.