Informed Capital in a HostileEnvironment - The Case ofRelational Investors in Germany

Informed capital is a crucial ingredient to a well-functioning market for start-upfinance, especially in times of difficult market conditions. For bank-basedsystems, the question regarding which investors actually supply informed capitalhas not yet been answered. To fill this gap, we conduct a survey among 85German suppliers of start-up finance. We find significant differences between theinvestors which are linked to banks and those financiers which are not. Although,the bank-related group, including public equity suppliers, delivers some sort ofinformed capital, venture capital companies and Business Angels are the keyproviders of informed capital in the German market for start-up finance...