Saunders & Lewis: Doing Research in Business & Management, 1st edition, additional case studies

Case 6e Gaining Access to Business Angels Networks

Stephanie Macht, Northumbria University

Stephanie had decided to use her masters project to build upon the research she had undertaken as part of her undergraduate studies. During this she had researched Business Angels, private, wealthy individuals who invested large amounts (between 10,000 and 500,000) of their own money in small, young businesses, with which they have no family connection (Deakins & Freel, 2003). For her masters dissertation she wished to develop this research to answer the research question To what extent and why do Business Angels become involved post investment in the companies in which they have invested? She had decided to collect data to answer this by administering a questionnaire to Business Angels throughout the United Kingdom (UK). From her undergraduate studies, Stephanie already knew that Business Angels liked to remain anonymous (Harrison & Mason, 1992). As extremely wealthy people, Business Angels knew that, if everyone knew how rich they were, they would be inundated with investment proposals and other requests for money. Consequently, directories or public listings recording names of Business Angels did not exist (Van Osnabrugge & Robinson, 2000). She also knew that for both potential investees and researchers interested in Business Angels there were two main ways of gaining access: meeting a Business Angel and getting referred to his/her acquaintances (it is commonly known that Business Angels are well networked with their peers), using intermediaries.

Since Stephanie did not know any Business Angels herself, the first option was not open to her. Therefore, the only way to conduct her research was to gain access to intermediaries, whom in turn could provide her with access to the Business Angels. Although a number of different intermediaries exist, Stephanie felt that Business Angel Networks were likely to be the most efficient. Such networks are created with the explicit purpose to match angel investors looking for investments with companies looking for funding (Mason & Harrison, 1997). There are about 20 Business Angel Networks, each of which maintains a list of their members, the Business Angels. These networks distribute newsletters to their members and organise investment events, where entrepreneurs attempt to obtain funding from potentially interested Business Angel investors by pitching their ideas. The Business Angel Networks are also part of a national trade association, the British Business Angels Association (BBAA). Stephanie knew that she had to get access to the Business Angel Networks first, before being able to reach the Business Angels. However, she also knew that Business Angel Networks receive vast numbers of requests for support in research projects. Consequently, she was concerned that she might not be able to capture their interest, which would result in her research requests being rejected. In order to avoid rejection, she had to make sure that her request was noticed and subsequently gain the respect and confidence of Business Angel Network managers. By doing this, she hoped they would be willing to distribute her questionnaire to those Business Angels who were members. During her undergraduate project, Stephanie had established contact with a small number of Business Angel Networks, whom she had subsequently updated about her research progress. These she felt would provide starting point for negotiating access to further Business Angel Networks.

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Saunders & Lewis: Doing Research in Business & Management, 1st edition, additional case studies

Stephanie decided to attend a number of investment events, where she would have the opportunity to also discuss her research with the respective Business Angel Network managers face to face. During each discussion, Stephanie explained her research intentions and asked the Business Angel Network managers for their opinions on her research. The network managers feedback was, without exception, positive and they were also willing to distribute a questionnaire to their Business Angels. Stephanie also asked each of the Business Angel Network managers to provide a short written endorsement regarding her research and for permission to quote it. At one meeting she met the manager of the BBAA, who asked Stephanie to write a short news item for their monthly newsletter, promoting her research to all the member Business Angel Networks. She agreed immediately because she knew that this could help establish her credibility as a researcher and encourage other, hitherto unknown, Business Angel Networks to also participate at the questionnaire distribution. Once the newsletter item had been published, Stephanie started by telephoning the Business Angel Network managers she had not been in contact with before. She had a vast amount of experience in making telephone calls having worked in a call centre, selling telecommunications platforms to businesses all over Europe during her work placement. Her experiences had taught her that cold calls are often either ignored or rejected. Therefore, she knew that, in order to maximise her chances of obtaining access to the Business Angel Networks, she had to appear well prepared, professional and highly interested. Stephanie further knew that she only had one chance with each Business Angel Network manager, so that her approach had to be perfect in the first instance. To achieve this, she applied the skills and techniques she had learned whilst working at call centre. These focused on three distinct aspects: she developed a document detailing all the information she had to mention in the telephone conversation, so that she could be sure that she would not forget anything; prior to each call, she also researched the specific Business Angel Network carefully to ensure she addressed the correct person and that she had specific background knowledge of that organisation; during each call conversation, she was professional and polite at all times.

Stephanies work experience in the call centre had taught her an organised and clear way of managing telephone conversations with a wide array of different partners. This she felt would help her cope with the large amount of different telephone conversations, without accidentally confusing people and thereby losing her credibility. She therefore recorded detailed notes about each conversation (i.e. person spoken to, date, time, outcome etc.) in a spreadsheet.

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Saunders & Lewis: Doing Research in Business & Management, 1st edition, additional case studies

At the end of each conversation, Stephanie asked the respective Business Angel Network manager if she could send her or him a brief email summarising the main points of their conversation. All managers agreed to this, which Stephanie sent the same day. She further ensured that she again remained professional by double-checking each email for even small mistakes, such as the misspelling of the recipients name. She included her BBAA newsletter entry and the endorsements she had obtained earlier from the initial Business Angel Network managers in the email, hoping that they would help further establish her credibility and promote a greater interest from the remaining Business Angel Networks. Stephanie spent many hours on the telephone and sending emails, trying to arrange telephone conversations with all 20 Business Angel Network managers, clarifying issues, offering to send a copy of her findings and explaining how participation would benefit them.

Due to Stephanies persistence and professional manner, most Business Angel Networks managers agreed to distribute her questionnaire to their Business Angel members. Unfortunately, her negotiations for access were not yet over as she still had to gain acceptance from the individual Business Angels and ensure their cooperation to fill in the questionnaire, once distributed by the Business Angel Network managers. She stuck to the same principles: Professionalism, perfectionism, and good preparation. Nevertheless, she had less control over this stage of her access negotiations because the actual distribution of the questionnaire was undertaken by the Business Angel Network managers. All she could do (and she did) was to ensure the questionnaire was attractive and easy to complete and the covering letter explained the purpose of her research clearly. In addition, she offered each respondent a summary of the findings. Questions 1. Which factors helped Stephanie getting access to these highly sought-after organisations? 2. What problems did Stephanie face in the access negotiation stage of her project? How did she overcome these?

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Saunders & Lewis: Doing Research in Business & Management, 1st edition, additional case studies

3. What access negotiation techniques has Stephanie applied in her project? 4. What are the downsides of these access negotiation techniques? References
Deakins, D. & Freel, M. (2003). Entrepreneurship and small firms. Maidenhead, Berkshire:

McGraw-Hill Education.
Harrison, R. T. & Mason, C. M. (1992). International Perspectives on the Supply of

Informal Venture Capital, Journal of Business Venturing, Vol. 7, No. 6, pp. 459-475.
Mason, C. M. & Harrison, R. T. (1997). Developing the Informal Venture Capital Market in

the UK: Is there still a Role for Public Sector Business Angel Networks?, Small Business Economics, Vol. 9, No. 2, pp. 111-123. Van Osnabrugge, M. & Robinson, R. J. (2000). Angel Investing: Matching Start-up Funds with Start-up Companies The Guide for Entrepreneurs, Individual Investors, and Venture Capitalists. San Francisco: Jossey-Bass Inc.

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