Subject The article discusses the role of venture investors, which are called angel investors. Innovative and diversified economy is indispensable without the comprehensive development and assistance to angel investors, including governmental methods for encouraging business angels' activities, tax incentives. Objectives The article provides our summary of international business angels' practices and guidelines for regulating the tax treatment of business angels and creating favorable conditions for them to operate today. Methods We prove the reasonableness, reliability and soundness of our recommendations by investigating the development of business angels' activities abroad and in Russia from regulatory and comprehensive perspectives. We also resort to retrospective, systems and functional-structural analysis, observation, classification, tool-based techniques for grouping, sampling, comparison and generalization, evolutionary and trend analysis. Results We review key issues and their solutions in terms of favorable conditions for revitalizing business angels' activities in Russia. The taxation systems and preferential tax treatment of private venture investors undergo the reforming process in accordance with the current global practices. However, it seems disputable to focus on tax benefits for private professional investors only. We justify the adoption of standards for qualifying private investors as angel investors, elevating the investment and legislative culture, encourage the confidential business partnership and reduce the monopolization in certain economic sectors. Conclusions There should be a comprehensive program for creating favorable conditions for business angels in the Russian Federation, supporting the performance of regional associations of business angels and facilitating the enforcement of tax incentives to private investors.
Keywords: angel investor, business angel, venture finance, investment, tax deduction
References:
Hill B.E., Power D. Biznes-angely. Kak privlech' ikh den'gi i opyt pod realizatsiyu svoikh biznes-idei [Attracting Capital from Angels: How Their Money – and Their Experience – Can Help You Build a Successful Company]. Moscow, Eksmo Publ., 2008, 496 p.
Kerr W.R., Lerner J., Schoar A. The Consequences of Entrepreneurial Finance: A Regression Discontinuity Analysis. NBER Working Paper Series, 2010, vol. 15831, 36 p.
Wetzel W.E. Jr. Angels and Informal Risk Capital. Sloan Management Review, 1983, vol. 24, iss. 4, pp. 23–34. URL: Link
Huang L., Wu A., Min Ju Lee. The American Angel Campaign. Wharton Entrepreneurship and Angel Capital Association, 2017. URL: Link
The American Angel Campaign, Executive summary. Wharton Entrepreneurship and Angel Capital Association 2019. URL: Link
Verrill D., Hudson M. Angel Investors – Critical Initiators of Startups and Job Creation. SEC Proposed Rule. Center for Venture Research, Academic Studies, 2012. URL: Link
Witbank R.E. Siding with the Angels. BBAA, 2009. URL: Link
Proposals to Enhance Singapore’s Economy. Local Today. Global Tomorrow. PricewaterhouseCoopers, 2017. URL: Link
Losso J., Chikhladze K., Hanki J. Evaluation of EU Member States’ Business Angel Markets and Policies. European Trade Association for Business Angels, Seed Funds and Early Stage Market Players, 2012.
Schumpeter J.A. Teoriya ekonomicheskogo razvitiya [Theorie der wirtschaftlichen Entwicklung: eine untersuchung über unternehmergewinn, kapital, kredit, zins und den konjunkturzyklus]. Moscow, Progress Publ., 1982, 401 p.
