Michael Pelz

Venture capitalists (VCs) and business angels (BAs) evaluating a startup and deciding whether to invest is a multifaceted and complex process. The topic attracted much attention among researchers as well as in the mass media. This study takes account of the variety of information sources on startup evaluation by conducting an extensive literature review of academic and non-academic resources. In doing so, the study views the evaluation procedure of VCs and BAs from an information processing perspective and focusses on the level of objectivity or subjectivity in their decision-making. The review of literature illustrates that VCs and BAs follow a similar, multi-step procedure during evaluation while the processing of information varies across the steps. Besides, the level of objectivity or subjectivity appears to depend on the evaluation step as well as on the investor type and startup stage. The study contributes by taking a so far underrepresented approach of highlighting the information processing of VCs and BAs in a detailed overview of their evaluation procedures.