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Founding Angels as innovative business model
The issue of financing, especially in early stages, represents a particularly serious challenge for many start-ups. But besides capital, new technology based companies usually lack business know-how, i.e. the recipe of how to make their business grow, as the founders are usually highly research orientated innovators. The technology-focused outlook prevailing among entrepreneurs represents a major problem for the cooperation of start-ups with VC firms.
Within these settings, one of the most attractive alternatives for a growth-oriented start-up company is to turn to the parties who can provide them with advice on how to grow and offer equity financing. Especially for young technology companies business angels are important due to their experience and personal network as well as the function of the "missing link" to cover the financial gaps in the high risk early stage phase. Operative assistance is valued more highly than business management advice especially when the tasks are complicated, i.e., in companies established on the basis of a technological innovation.
An analysis of established business models in the area of start-ups shows that the Founding Angels business model clearly differs from the known players and business models and has not yet been established there. While the known players such as technology transfer offices at universities and research institutes, business plan competitions and founding consultancies are only active in parts of the value chain, business angels and venture capital companies are focused on already founded companies.
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