Decision policies of investors in evaluating startups: A literature review of the extent to which venture capitalists and business angels differ in evaluating early-stage startups, and the explanations for such differences
This paper reviews literature on how Venture Capitalists (VCs) and Business Angels (BAs) evaluate early-stage startups. In particular, it compares the factors that VCs and BAs use, and the relative weight that they attribute to those factors. The paper shows that VCs tend to weigh factors in a more extensive, formal way, whereas BAs prefer a more informal way, emphasizing considerations such as fit. The literature review then comprehensively examines all explanations that have been advanced to account for such differences.