%0 Journal Article
%T How Angel Know
%A Fehmi Tanrisever
%A Moren L¨¦vesque
%A Nitin Joglekar
%A S. Sinan Erzurumlu
%J Entrepreneurship Theory and Practice
%@ 1540-6520
%D 2019
%R 10.1177/1042258717744205
%X We draw upon stewardship theory to formally derive bounds on the investment amount in a business prospect, and to characterize ownership sharing when investors offer two-stage financing along with know-how to increase the prospect¡¯s valuation. In the early-development stage, we show that the direct effect of investor know-how increases the entrepreneur¡¯s share while the indirect effect from that know-how due to its interaction with the investment size, decreases it. In the subsequent growth stage, the direct effect decreases the entrepreneur¡¯s share while the indirect effect increases it. These tradeoffs offer theoretical and practical implications for writing investment contracts involving investor know-how
%K stage-based contract
%K investor know-how
%K value creation
%K angel investors
%K stewardship theory
%K empirical analysis
%K mathematical analysis
%U https://journals.sagepub.com/doi/full/10.1177/1042258717744205