Angels, entrepreneurship, and employment dynamics: Evidence from investor accreditation rules

This paper examines the effects of a shock to angel finance on entrepreneurial activity. Using U.S. Census data, we estimate the state-level fraction of households that lost accreditation status from Dodd–Frank’s elimination of housing wealth in determining accreditation. A larger reduction in the pool of potential investors reduces angel investment, firm entry, and employment at small entrants. Employment increases at small and young incumbents, suggesting competitive effects. Though we document partial substitution, angel finance appears to complement other capital sources in the entrepreneurial ecosystem. Our paper offers insight on the impact of angel finance and where it matters most.

SSRN version

Lindsey, L., Stein, L.C.D., 2025. Angels, entrepreneurship, and employment dynamics: Evidence from investor accreditation rules (Working Paper No. 2939994). SSRN.
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