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Assignment Questions

Papers on Venture Capital Decision Making

I have written three papers on venture capital (VC)decision making, each with an introductory section specific to the paper.
Chapter Two is a literature review spanning forty years of research focused on VC decision making criteria and the VC decision making process. This chapter serves as the foundation for the study as it highlights the common findings and generally accepted beliefs reported in the vast majority of studies while also identifying key areas that have yet to be explored. Although the evolution of the two research streams are presented separately in order to focus on the developments and emerging areas of interest within each stream the overlap between the two is then highlighted. Finally, the key decision making criteria repeatedly identified in past research are discussed in terms of their role and perceived significance within the context of VC decision making.
In Chapter Three I present the results of an exploratory study of rejected, or dead, deals, those deals which have not been selected as portfolio investments. Researchers have typically focused on the one percent of deals that are selected by VCs yet little attention has been given to the remaining, majority, of deals that do not successfully make it through the screening and evaluation process. The study is based upon the analysis of eleven years of archival data collected from a European VC firm. I first seek to provide an in-depth understanding of the factors and processes associated with deal rejection while also attempting to determine if the four main criteria reported as reasons for positive investment decisions are similarly cited as key reasons for deal rejection. Additionally, I attempt to identify patterns of rejection across the eleven year timeframe which includes the decisions for two separate investment funds within the firm.
Chapter Four further examines the data on rejection and focuses on the specific criteria related to the characteristics of the firm’s portfolio. I hypothesize that the investment decisions, specifically rejection decisions, of VCs will be influenced by the evolving characteristics of the firm’s portfolio and therefore use factors representative of the portfolio as the independent variables. Drawing on the results of both the qualitative and quantitative analysis a dynamic model of VC decision making is proposed which highlights the interaction between the multiple activities within a VC firm and also serves to integrate the two streams of literature within this area of research.

Now I need the introduction chapter that introduces the concept of strategic decision making in business (Eisenhardt & Zbaracki, 1992; Mintzberg, Raisinghani, & Theoret, 1976) in general. A section is needed that discusses the importance of the environment or decision making context (Brunswik, 1955; Hogarth, 1981). Also, a brief section commenting on why the VC industry is an appropriate (or compelling) setting to study decision making, both process and content. Including comments on bounded rationality (Simon) and organizational decision making (March & Simon)would be appropriate as well.
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