Abstract Though the informal capital has been identified as a primary source of financing during the early stage of new entrepreneurial ventures, there is little research explaining the factors determining the propensity of individuals to make informal investments in a transition country like China. We use the data from Zhejiang Entrepreneurship Monitor (2016) to examine the characteristics of informal investors and the key determinant factors. The findings reveal that knowing entrepreneurs personally and perceiving new business opportunities are the most important factors influencing the informal investing propensity, involving entrepreneurial activities that have substitutive or complementary effects on informal investment. The findings provide important guidance for policy makers to increase informal capital supply.
|