Starting up and Growing New Businesses
Edited by Bart Clarysse, Juan Roure and Tom Schamp
Chapter 2: An Analysis of the Selection Behaviour of Early-Stage High-Tech Investors in Europe
Bart Clarysse, Mirjam Knockaert, Andy Lockett and Caroline Van Eeckhout 1. INTRODUCTION Even though research into decision criteria has been a major topic over the past two decades, most studies have been undertaken with US-based venture capitalists (VCs), and have focused on the venture capital industry as a whole. Several researchers have, however, indicated that high-tech investing is diﬀerent (for example, Lockett et al., 2002) from non-tech investing and that early-stage investing is diﬀerent from late-stage investing. This chapter focuses on how the speciﬁc group of early-stage high-tech venture capitalists make their investment decisions. First, we look at how these early-stage high-tech investors select their investments, and which selection criteria matter. Second, we look at what determines diﬀerences in selection behaviour. This research, using a novel methodology, is carried out in seven selected high-tech regions in Europe that have a high venture capital presence. Previous research has identiﬁed a number of important criteria on which VC ﬁrms base their decision to invest. Some researchers found that the ability of the entrepreneurs (such as management skills and management team) mattered most (Tyebjee and Bruno, 1984; MacMillan et al., 1985, 1987; Shepherd and Zacharakis, 1998). Some found the market environment of the new venture to be the most determining selection criterion for VCs (Hisrich and Jankowitz, 1990; Muzyka et al., 1996). Others found the ﬁnancial criteria, exit opportunities and product/service characteristics to be the most important selection criteria (MacMillan et al., 1987). Even though these previous studies...
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