Entrepreneurs´ Criteria in Selection Decisions of Venture Capital
The purpose of this article was to extend existing research on the entrepreneurial decision process when selecting venture capital partners by empirically examining the overall process entrepreneurs go through. I used an inductive, theory-building design based on 15 semi-structured interviews with founders, CEOs and investors, all having been involved in venture capital related activities before. The data revealed several patterns on how entrepreneurs predominantly make decisions with which VC investor they want to partner. They first tend to question financial aspects such as valuation, look at value-added services and also include personal attributes such as personal fit in their decision process. Also, my study highlights how employed criteria interrelate and how individual environmental circumstances can alter previously employed criteria (e.g., VC-expertise may be more important to the entrepreneur than a preferable valuation). Further, I also introduce a new category of criteria responsible for ending VC-negotiations called “deal breaker”. Taken together, the insights of this study contribute to the literature by presenting reasons for why entrepreneurs make decisions in a certain way.