How do Venture capitalists make decisions?

Nice piece by Antoine Buteau.

Even though only 0.25% of companies receive venture financing, venture capital is an important source of financing that result in an outsized impact on the economy. Some studies estimate that 50% of U.S. IPOs are VC-backed and that these companies account for 20% of the U.S. market capitalization and 44% of R&D spending.

Although VCs fill a gap in the market by connecting entrepreneurs with good ideas but no money with investors, they are sometimes seen as a black box with little information on how they make decisions about their investments and portfolios. The authors of this paper wanted to answer these questions and they did so by surveying almost 900 VCs on multiple areas: deal sourcing, investment selection, valuation tools, deal structure, post-investment value add, exits, internal organization of the firms and relationships with limited partners. This summary will be focused on worldwide VC firms across stage (early/late) and on the information technology/software sector blended with the healthcare sector.

 

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One Response to “How do Venture capitalists make decisions?”

  1. Oleg Komlik Says:

    related:The potential and the limitations of venture capital as a source of funding for clean energy
    https://economicsociology.org/2014/12/10/the-potential-and-the-limitations-of-venture-capital-as-a-source-of-funding-for-clean-energy/

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