COLIN MASON IS PROFESSOR OF Economic Geography at the University of Southampton, England; Richard Harrison is Director of the Centre for Entrepreneurship and Professor of Management, University of Aberdeen, Scotland. The need to increase the availability of small-scale early stage venture capital has been recognised as a key factor in the development of an entrepreneurial economy. Informal venture capital plays a key role in financing the earliest stages of entrepreneurial growth ventures. This paper is an exploratory attempt to identify the factors that influence the supply of informal venture capital. A questionnaire survey of business angels sought to examine the macro-economic factors that influence the proportion of their personal investment portfolio allocated to investments in unquoted small businesses. The findings indicate that tax is the most significant influence on the willingness of business angels to make such investments whereas the economic environment-the rate of economic growth, interest rates and the rate of inflation-exerts a much mote modest influence.
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