TY - JOUR

T1 - Which venture capital selection criteria distinguish high-flyer investments?

AU - Schulte, Reinhard

AU - Streletzki, Jan-Georg

PY - 2013/1

Y1 - 2013/1

N2 - This study is based on an analysis of 64 ventures that were funded by German Venture Capital (VC) firms in order to identify VC selection criteria that distinguish non-high-flyer exits from high-flyer exits (exits that returned more than five times the VC's first-round money invested). Based on highly sensitive data, which are the venture's first-round business plan and the VC's return rate of the particular venture at exit, three high-flyer predictors were identified: company, product and market related. Logistic regression and discrimination analysis revealed that ventures with the following characteristics have the best chance of generating a VC high-flyer exit: targeting the business-to-customers market, being location in a metropolitan cluster and close to the lead investor, raising VC financed prior to the proof of concept level and having strategic partners raising the first round of VC investment. Ventures that have spun out from corporate institutions perform below average in terms of VC exit performance.

AB - This study is based on an analysis of 64 ventures that were funded by German Venture Capital (VC) firms in order to identify VC selection criteria that distinguish non-high-flyer exits from high-flyer exits (exits that returned more than five times the VC's first-round money invested). Based on highly sensitive data, which are the venture's first-round business plan and the VC's return rate of the particular venture at exit, three high-flyer predictors were identified: company, product and market related. Logistic regression and discrimination analysis revealed that ventures with the following characteristics have the best chance of generating a VC high-flyer exit: targeting the business-to-customers market, being location in a metropolitan cluster and close to the lead investor, raising VC financed prior to the proof of concept level and having strategic partners raising the first round of VC investment. Ventures that have spun out from corporate institutions perform below average in terms of VC exit performance.

KW - Management studies

KW - Entrepreneurship

KW - Existenzgründung

KW - exit success

KW - high flyer

KW - new venture performance

KW - selection criteria

KW - venture capital

KW - Entrepreneurship

KW - Gründung

UR - https://www.scopus.com/record/display.uri?eid=2-s2.0-84874644530&origin=inward&txGid=0

U2 - 10.1080/13691066.2012.724232

DO - 10.1080/13691066.2012.724232

M3 - Journal articles

VL - 15

SP - 29

EP - 52

JO - Venture Capital

JF - Venture Capital

SN - 1369-1066

IS - 1

ER -