Seed and early stage venture capital investments, later stage venture capital investments and growth capital investments, 2008-13

This research presents the summary findings on six case studies of successful, venture capital investments in new technology-based firms in four European countries. In all cases, the enterprises had been financed by specialist, early-stage, and technology-focused venture funds which had exited the investments at a significant economic return. The exceptional competence and track records of the founder managers, and their defensible product position in growing markets, each appeared to be a common feature across the individual case studies. The paper also questions the unitary nature of the entrepreneurial process, arguing for entrepreneurial resources to be seen as an eclectically sourced stock.

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

Journal of Small Business and Enterprise Development ◽

10.1108/jsbed-10-2013-0165 ◽

2014 ◽

Vol 21 (3) ◽

pp. 505-527 ◽

Cited By ~ 10

Author(s):

José Carlos Nunes ◽

Elisabete Gomes Santana Félix ◽

Cesaltina Pacheco Pires

Keyword(s):

Venture Capital ◽

Early Stage ◽

Management Team ◽

Venture Capitalists ◽

Capital Investments ◽

Share Capital ◽

Content Type ◽

The Impact ◽

Venture Capital Investments ◽

Public Share

Purpose – The purpose of this paper is to identify the importance assigned to the various criteria used by the Portuguese venture capitalists (VCs) to evaluate and select early stage venture capital (VC) projects. Design/methodology/approach – The data were collected through a questionnaire answered by 20 Portuguese VCs. The authors 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. Findings – The study reveals that 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. Originality/value – It provides evidence on the VCs behavior in a small VC market. Since most of the existing literature on this area refer to large VC markets, the present study is important to investigate whether the conclusions reached by the previous studies can be extended to a small VC market. Also, this study is a contribution to the literature on the internationalization of VCs and it is the first study that explores the impact of the VCs being internationalized on the value given to the various selection criteria of early stage VC projects.

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