Social Impact Business Angels as New Impact Investors

Abstract This study aims to understand how business angels (BAs) who intentionally prioritize investments in start‐ups with a significant social impact (i.e. social impact business angels, SBAs) differ in their characteristics from non‐social BAs. We also examine which features of the investment process of SBAs differ from those of non‐social BAs, and whether social impact considerations are included in investors’ decision‐making. The study also proposes a conceptual model that integrates the relationships between individual characteristics, the likelihood of acting as an SBA, and management of the investment process with the inclusion of both economic and impact concerns. Our analyses are based on a sample of 212 surveyed BAs and on follow‐up interviews with 10 SBAs. We find that certain investor characteristics can explain how SBAs differ from non‐social angels. SBAs follow a similar investment process to other BAs, but they conduct additional evaluations focused on the impact potential of the opportunities.