Ready for funding? Entrepreneurial ventures and the pursuit of angel financing

Drawing on literature from organizational behavior, strategic change and management of technology, we examine the new ventures' readiness for funding by angel investors, using a dataset of 332 firms that sought investment from a prominent angel group located outside of Boston, MA during 2007-2008. Findings suggest that perceptions of venture readiness for funding change throughout the angel evaluation process. Tangible, objective organizational characteristics are important during the first decision-making stage, while intangible, subjective new venture characteristics are more important during subsequent decision stages. This suggests that what the entrepreneur perceives as an organization ready for outside funding may be very different from the angel investor's perception. Interestingly, location of the new venture remains significant throughout the angel investment decision-making process, implying that entrepreneurs need to think carefully before applying for funding outside their local area. Implications are discussed.