Cracking the Compass of Venture Capital: Unveiling Venture Capital Investors’ Decision Criteria
- Lehrstuhl für Wirtschaftswissenschaften für Ingenieure und Naturwissenschaftler
Investigating Venture Capital Investors' Decision Criteria is an intriguing area of research due to several reasons:
• Influence on startups: Venture capital plays a crucial role in financing and supporting startups. Understanding the decision criteria employed by venture capitalists provides valuable insights into the factors that determine which startups receive funding and support. This knowledge can help entrepreneurs better align their business strategies and increase their chances of attracting investment.
• Investment landscape dynamics: The venture capital industry is highly competitive and subject to constant changes. Studying the decision criteria of venture capitalists sheds light on emerging trends, shifts in market preferences, and evolving investment strategies. This knowledge is essential for entrepreneurs, policymakers, and researchers to stay updated with the latest investment dynamics.
• Risk and return considerations: Venture capital investments are inherently risky, and investors must carefully evaluate potential returns. Investigating decision criteria helps uncover the risk assessment methodologies, return expectations, and risk-reward trade-offs considered by venture capitalists.
• Economic and societal impact: Venture capital investments have significant economic and societal implications. They stimulate innovation, job creation, and economic growth. By investigating decision criteria, researchers can identify biases, gaps, and potential barriers that may exist in the investment process. Addressing these issues can lead to more inclusive and equitable access to venture capital funding, fostering a more vibrant entrepreneurial ecosystem.
In a nutshell: In your thesis you are asked to prepare a holistic literature review of venture capital investors decision criteria. It is crucial to derive the overarching criteria and influencing moderators as well as to create transparency on and critically evaluate the methods used.
What's in it for you?
• Gain a deep insight into the investment decisions of venture capitalists and thus into a highly relevant research topic
• Gain practical experience for potential positions in the entrepreneurship ecosystem, e.g. venture capital funds ("money supply") or founders ("money demand")
• Receive continuous guidance for your research work as well as exciting practice-relevant insights
Literature for initial reading:
• Gompers, P. A., Gornall, W., Kaplan, S. N., & Strebulaev, I. A. (2020). How do venture capitalists make decisions?. Journal of Financial Economics, 135(1), 169-190.
• Bernstein, S., Korteweg, A., & Laws, K. (2017). Attracting early‐stage investors: Evidence from a randomized field experiment. The Journal of Finance, 72(2), 509-538.
• Warnick, B. J., Murnieks, C. Y., McMullen, J. S., & Brooks, W. T. (2018). Passion for entrepreneurship or passion for the product? A conjoint analysis of angel and VC decision-making. Journal of Business Venturing, 33(3), 315-332.
Keywords: Entrepreneurial Finance, Venture Capital, Investment Decisions, Fundraising, Private Equity