Factors influencing venture capitalists' project financing decisions in South Africa

Van Deventer, Bart and Mlambo, Chipo (2008): Factors influencing venture capitalists' project financing decisions in South Africa. Published in: South African Journal of Business Management , Vol. 40, No. 1 (30 March 2009): pp. 33-41.

Abstract

This study explores and identifies the investment criteria used by South African venture capitalists in their venture screening and evaluation processes. Using a Likert scale type of questionnaire, South African venture capitalists (VCs)were asked to rate the investment criteria identified in similar studies abroad and to report any additional criteria of their own. By evaluating the mean ratings, it was found that South African VCs consider the entrepreneur’s honesty and integrity; a good expected market acceptance; and a high internal rate of return (IRR), to be the three most important criteria. The South African VCs, just like their overseas counterparts, regard management considerations to be the most important criteria group in the evaluation of new investment projects. The results of this study are deemed useful to both venture capitalists in their decision-making process and to entrepreneurs in their venture capital applications to maximise their success rate.

• Item Type: MPRA Paper
• Language: English
• Keywords: South Africa; venture capital; investment criteria; entrepreneur
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; N - Economic History > N2 - Financial Markets and Institutions > N27 - Africa ; Oceania; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies

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