1. 1 ERES Conference 2009 Commercial real estate and business angel activity Author: Silver, Lars

2. 2 Commercial real estate in small communities

3. 3 Entrepreneurial orientation Entrepreneurial orientation and small business orientation, based on cognition (Baron 2004) Entrepreneurial experience results in increased opportunity recognition (Ward 2004) Transfer of capital and knowledge (Wiklund et al 2009) Knowledge spillover effects (Shane 2001)

4. 4 Business angels Informal investors supplying both capital and knowledge in interaction with portfolio firms (Aernoudt et al 2007) Business angels invest their own capital and do not use a formal organization to do so (Mason 2006) Especially important in early stage financing (Sohl 2003) Motivations for business angel activity varies from purely financial to philantropic (Paul et al 2003)

5. 5 Hypothesized relationships Business angel activity Entrepreneur orientation Local community growth Commercial real estate investments

6. 6 Methodology (Lincoln and Guba 1985; Corley 2004) Internal validity Member checks (i.e., seminars) Longitudinal engagement in field Triangulation External validity Thick description Reliability Purposive sampling Informant’s confidentiality ensured Comparison with other researchers in the field Objectivity Recordings and transcription Research group collaboration Notes on theoretical development

7. 7 Four cases Illustration 1: From paintings to commercial real estate development Illustration 2: The second journey Illustration 3: The savior of the community Illustration 4: The small town real estate business model

8. 8 Information asymmetry reduction Small business are opaque in terms of available information (Hsu 2004) Business angels rely on personal contacts instead of contracts (Shane and Stuart 2002) Commercial real estate developers can maximize information availability and thus reduce information asymmetry

9. 9 Business network Incubators are locations for capital and knowledge transfer to emerging businesses (Clarysse and Bruneel 2007) Social capital enhances the resource base, increases competitiveness and survivability (Li 2007) Commercial real estate offers the opportunity for portfolio firms to engage in business networks while also increasing the business angels information about the local community

10. 10 Knowledge transfer There is an increasing need for advice, especially in terms of management, in small businesses ( Ramsden and Bennett 2005). Experienced entrepreneurs are more effective in recognizing business opportunities ( Baron and Ensley, 2006) Experienced entrepreneurs use their deal flow and due diligence capacities to increase their chances of finding small businesses and also improve these businesses chances to survive

11. 11 Conclusions Experienced entrepreneurs use of commercial real estate development and business angels practice are linked in a number of ways: - Opportunity recognition - Risk levels - Need to reduce agency costs - Use of business networks - Proactivity - Entrepreneurial orientation - Knowledge spillover