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Which criteria matter most in the evaluation of venture capital investments?

Author

Listed:
  • José Carlos Nunes

    (Escola Superior de Gestão e Tecnologia de Santarém, Instituto Politécnico de Santarém, Santarém, Portugal)

  • Elisabete Félix

    (CEFAGE-UE, Departamento de Gestão, Universidade de Évora, Évora, Portugal)

  • Cesaltina Pires

    (CEFAGE-UE, Departamento de Gestão, Universidade de Évora, Évora, Portugal)

Abstract

This study identifies the importance assigned to the various criteria used by the Portuguese Venture Capitalists (VCs) to evaluate and select early stage venture capital projects. The data was collected through a questionnaire answered by 20 Portuguese VCs. We use descriptive statistics techniques and non-parametric tests to identify the most valued criteria and test differences in the importance assigned to the criteria of several types of VCs and investments. The study reveals that the personality and experience of the entrepreneur and of the management team are the most valued groups of criteria. VCs with a majority of private share capital value more the personality of the entrepreneur and management team than the companies with a majority of public share capital. Additionally, the VCs that did not yet internationalize consider the personality of the entrepreneur and management team and the financial aspects, to be more important than the VCs that have already expanded abroad.

Suggested Citation

  • José Carlos Nunes & Elisabete Félix & Cesaltina Pires, 2011. "Which criteria matter most in the evaluation of venture capital investments?," CEFAGE-UE Working Papers 2011_10, University of Evora, CEFAGE-UE (Portugal).
    • Handle: RePEc:cfe:wpcefa:2011_10
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    More about this item

    Keywords

    Venture capital; Evaluation criteria; Early-stage investments; Internationalization.;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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