Should business angels diversify their investment portfolios to achieve higher performance?: The role of knowledge access through co-investment networks

Torben  Antretter; Charlotta Sirén; Dietmar Grichnik; Joakim Wincent

doi:10.1016/j.jbusvent.2020.106043

Should business angels diversify their investment portfolios to achieve higher performance? The role of knowledge access through co-investment networks

Torben Antretter, Charlotta Sirén, Dietmar Grichnik^*, Joakim Wincent

^*Corresponding author for this work

Entrepreneurship, Management and Organisation, Helsinki

Research output: Contribution to journal › Article › Scientific › peer-review

21 Citations (Scopus)

Abstract

This paper investigates the performance effects of business angel portfolio industry diversification. Using a unique bi-annual panel dataset of 142 members of a professional angel investment platform and their portfolio returns between 2013 and 2017, we consider the costs and benefits of diversifying investments into various industries. Drawing upon theoretical arguments about distant search, we theorize and find a nonlinear (S-shaped) relationship between portfolio industry diversification and performance. Further, we pay specific attention to a proposed overdiversification effect that takes place at high levels of portfolio industry diversification and show that this effect is moderated by individuals' access to industry knowledge through their co-investment networks. For business angels who have a central position within a diverse network of industry specialists, the overdiversification effect is less pronounced.

Original language	English
Article number	106043
Peer-reviewed scientific journal	Journal of Business Venturing
Volume	35
Issue number	5
ISSN	0883-9026
DOIs	https://doi.org/10.1016/j.jbusvent.2020.106043
Publication status	Published - 29.08.2020
MoE publication type	A1 Journal article - refereed

Keywords

512 Business and Management
business angels
distant search
networks
portfolio diversification
syndication

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10.1016/j.jbusvent.2020.106043Licence: CC BY-NC-ND

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Cite this

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Should business angels diversify their investment portfolios to achieve higher performance? The role of knowledge access through co-investment networks. / Antretter, Torben ; Sirén, Charlotta; Grichnik, Dietmar et al.
In: Journal of Business Venturing, Vol. 35, No. 5, 106043, 29.08.2020.

Research output: Contribution to journal › Article › Scientific › peer-review

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