The Efficiency Audit of Business Angel Investment Activity

Investment activity of private business angels is one of the key factors boosting economic growth and innovative development of the country. However, this type of investing inherently carries a high degree of risk, because Angels typically fund a startup at the seed stage of a company, when there is only an idea, an unproven business model, and in addition to this it is impossible to predict the exact financial flows. The efficiency of project selection is fundamental to the financial success of the investments. To prove this it is enough to bring the following fact: approximately 40% of investment transactions break at this stage. Because of a lack of information, necessary for decision-making process, absence of the formalized evaluation criteria and insufficient of the project selection tools, business - angels can't effectively carry out their investment activity. The purpose of this study is to develop information and methodological support of the efficiency audit of Business Angel Investment activity. In the first section of the masterʼs work identified the objects, aims and objectives, as well as the existing methods, tools and criteria. The second chapter goes through an information base, which includes legal and regulatory information, characteristics of business angel and evaluation of the external environment. In the third Chapter we conducted a risk assessment, developed a plan and program of the efficiency audit of Business Angel Investment Activity and furthermore developed a model using a heuristic method to select the most attractive innovative project. The practical significance of the study lies in the fact that the main findings and proposed guidelines can be used by a large number of investors in order to increase the efficiency of their investment activities. In addition, the proposed methodical recommendations may also find use as a consulting and information materials for venture capital experts and managers of innovative projects.