German Venture Capitalists Investment Criteria Over Financing Stages

Abstract

This study empirically explores the respective importance of a variety of criteria relevant for the investment decision of German venture capitalists. We find that the relative importance of criteria varies with investment stages. In all stages, however, criteria in the personality of management category as well as the appreciation potential of the acquired equity stake are considered crucial. Irrelevant are various market characteristics, dividend potential, as well as the desired independence level of management. Thus, this analysis provides all participants in the venture capital (VC) process with a comprehensive understanding of the parameters underlying the VC investment decision in Germany.