The Influence of Startup Business Characteristics on Investment Decisions of Business Angels

A startup company (startup or start-up) is an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing or offering an innovative product, process, or service. Creative ideas initiated by young people have made the number of startups in Indonesia on the rise. A startup is considered to have good business potential, thus attracting investors to invest. These investors could be institutional and individuals. Individual investors that invest their funds in startup companies are called business angels or angel investors. In this context to make an investment decision, there are a few things that need to be considered to appraise whether the investment is feasible. The purpose of this research is to see how business angels appraise the characteristics of the startup business in which they invest. There are three characteristics to be considered - the characteristics of the founder, product characteristics, market characteristics. This study uses a quantitative method by making use of questionnaires as the data collection technique. The questionnaires were distributed to startup investors domiciled in Yogyakarta with a sample size of 100. The research findings reveal that founders’ characteristics, product characteristics, market characteristics can affect the investment decisions of business angels.