Angel capitalists exit decisions under information asymmetry: IPO or acquisitions

Angel capital is an important source of fund for start-ups. Based on the characteristics angel investment market and emotional factors between investor entrepreneur, we establish two different principal-agent models to study their impact exit mechanisms i.e., IPO acquisition. We find that: 1) In case IPO: as entrepreneur's factor increases, optimal incentives decrease; but investor's efforts increase. 2) When it comes acquisitions: with rising factor, decline; does not affect efforts. 3) Under certain conditions, decision influenced only by factor. Moreover, will be best mechanism, if greater than a unique threshold.