THE ROLE OF ANGEL INVESTORS' EMOTIONS IN SOCIALLY SITUATED INVESTMENT OPPORTUNITY EVALUATIONS

Purpose - The purpose of this chapter is to explore whether and how angel investors' emotions unfold in the investment opportunity evaluation process as they interact with the social environment. Complementing recent research that has emphasized the financial calculations, we add angel investors' own emotional arousal to the list of tools that may help them to rate investment opportunities. Design/Methodology/Approach - Drawing on semi-structured qualitative interviews, we develop a phenomenological analysis of the investment opportunity evaluation process at the level of angel investors' lived experience. Findings - Our findings indicate that when angel investors use their emotional arousal in evaluating investment criteria, they engage in a developmental process characterized by three elements: subjective validation, social validation, and investment decision. Research Limitations/Implications - We illuminate how discrete emotions can complement rational considerations in the opportunity evaluation journey. Capturing the nature of emotion as action oriented, embodied, socially situated, and distributed, we embrace its adaptive socially situated dynamics. Practical Implications - Taking a step toward better understanding of the soft aspects in the relationship development that leads to investments, we hope this study will help not only those entrepreneurs who need funding but also those policymakers who design new incentives that improve the flow of investment into promising new ventures. Originality/Value - We demonstrate how angel investors' emotions can complement their rational considerations in the investment opportunity evaluation process as they interact with the social environment. Identifying boundary values for the conditions that are necessary and sufficient to advance in the process, we have demonstrated how emotion can serve as a driving or restraining force not only during subjective validation but also during social validation.