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Research On Venture Capital Firms’ ‘Investment Behavior A Review’

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  • POONAM KHANNA
  • LEMARO THOMPSON
  • MICHAEL MCDONALD

    () (UTSA)

Abstract

During the last four decades, the venture capital (VC) industry has become an economically dominant force in the U.S. economy. Over 1,300 companies that were founded during this period are currently listed on major U.S. stock exchanges. Of these, 40% were VC-backed and were responsible for 85% of the total R&D spending in 2014. Given the economic importance of VCs, a vast amount of academic research has studied the VC industry. A particular area of interest in this research has been the factors that predict which new ventures will receive VC funding. Research prior to 2007 had identified several factors such as the personality and characteristics of the founder, the product, the market and the financial considerations as important in VC funding decisions. Since 2007, researchers have been successful in identifying certain new criteria that predict VC funding decisions and have also uncovered certain nuances in the effects of the criteria previously identified. This paper reviews this new research on VC funding decisions.

Suggested Citation

  • Poonam Khanna & Lemaro Thompson & Michael Mcdonald, 2015. "Research On Venture Capital Firms’ ‘Investment Behavior A Review’," Working Papers 0197mgt, College of Business, University of Texas at San Antonio.
  • Handle: RePEc:tsa:wpaper:0197mgt
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    Keywords

    venture capital; new venture; startup; funding criteria;

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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