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Effect of Professional Background on Venture Capital Proposal Evaluation

By Richard B. Carter and Howard E. Van Auken


This paper reports on the differences in investment related activities and evaluation criteria of venture capitalists having a business background compared to venture capitalists having a non-business background . Data was collected from a  nationwide survey  of 72 venture capitalists. The results show that venture capitalists having a non-business" background invest in earlier stages of the firm. require a shorter payback period and make more follow-up investments than business background venture capitalists. The non-business background venture capitalists place greater importance on the uniqueness of the product , the cost structure of the project and the entrepreneur' s health and  less importance on exit procedures  than business background  venture capitalists

Publisher: The Small Business Institute®
Year: 1992
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