Effect of Professional Background on Venture Capital Proposal Evaluation

  • Richard B. Carter Iowa State University
  • Howard E. Van Auken Iowa State University

Abstract

This paper reports on the differences in investment related activities and evaluation criteria of venture capitalists having a business background compared to venture capitalists having a non-business background . Data was collected from a  nationwide survey  of 72 venture capitalists. The results show that venture capitalists having a non-business" background invest in earlier stages of the firm. require a shorter payback period and make more follow-up investments than business background venture capitalists. The non-business background venture capitalists place greater importance on the uniqueness of the product , the cost structure of the project and the entrepreneur' s health and  less importance on exit procedures  than business background  venture capitalists.

Downloads

Download data is not yet available.

References

Batterson, L. A. (1986). Raising venture capital and the entrepreneur. Englewood·Oiffs, NJ; Prentice Hall.
Brigham, E. F., &_ Gapenski, L. C. ( 1989). lntermediate jinancial management (3rd ed.). Chicago, I L: Dryden Press.
Brophy, D. J. (1985). Flow of venture capital, 1977-1980. In H. H. Vesper ( Ed.), Frontiers of entrepreneurship research. Wellesley, MA: Babson College.
Carter, R. B., & Van Auken, H. E. (1990). A comparison of small business and large corporations: Interrelationships among position statement accounts. Journal of Business and Entrepreneur­ ship, 2 , 73-80.
Gladstone, D. (1988). Venture capital investing . Englewood Cl iffs, NJ: Prentice-Hall. Hisrich, R . D., & Peters, M. P. (1989). Entrepreneurship. Homewood, I L: Irwin.
Khan, A. M. ( 1985). Assessing venture capital investments with noncompensatory behavior deci- sion models. Journal of Bu;iness Venturing, I , 1 19-128.
Kuratko, l:l. F., & Hodgetts, R. M. (1989). Entrepreneurship: A contemporary approach. Chicago, I L: Dryden Press.
MacMillan, I. C., Seigel, R., & Subbanasasimha, P. N ..( 1985). Criteria used by venture capitalists to evaluate new venture proposals. Journal of Business Venturing , I , 1 19-123.
MacMillan,.!. C., Zemann, L., & Subbanasasimha, P. N. ( 1 987). Criteria distinguishing successful from unsuccessful ventures in the venture screening process. Journal of Business Venturing , 2 , 123-137.
Tyebjee, T. T., & Bruno, A. V. (1984). A model of venture capitalist investment activity. Management Science. 30, 35- 50.
Van Auken, H . E., & Carter, R . B. (1989). Capital acquisition in smaller firms. Journal of Small Business Management, 27, 1- 9.
Wetzel , W. E. (1987). The informal venture capital market: Aspects of scale and efficiency. Journal of Business Venturing. 2, 299-31 3.
Published
1992-01-17
How to Cite
CARTER, Richard B.; VAN AUKEN, Howard E.. Effect of Professional Background on Venture Capital Proposal Evaluation. Journal of Small Business Strategy, [S.l.], v. 3, n. 1, p. 45-55, jan. 1992. ISSN 2380-1751. Available at: <https://libjournals.mtsu.edu/index.php/jsbs/article/view/428>. Date accessed: 20 jan. 2020.
Section
Articles