Factors influencing venture capitalists' project financing decisions in South Africa
AbstractThis study explores and identifies the investment criteria used by South African venture capitalists in their venture screening and evaluation processes. Using a Likert scale type of questionnaire, South African venture capitalists (VCs)were asked to rate the investment criteria identified in similar studies abroad and to report any additional criteria of their own. By evaluating the mean ratings, it was found that South African VCs consider the entrepreneur’s honesty and integrity; a good expected market acceptance; and a high internal rate of return (IRR), to be the three most important criteria. The South African VCs, just like their overseas counterparts, regard management considerations to be the most important criteria group in the evaluation of new investment projects. The results of this study are deemed useful to both venture capitalists in their decision-making process and to entrepreneurs in their venture capital applications to maximise their success rate.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24970.
Date of creation: 31 Aug 2008
Date of revision: 28 Feb 2009
Publication status: Published in South African Journal of Business Management 1.40(2009): pp. 33-41
South Africa; venture capital; investment criteria; entrepreneur;
Find related papers by JEL classification:
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
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