Thesis (M.M. (Entrepreneurship and New Venture Creation))--University of the Witwatersrand, Faculty of Commerce, Law and Management, Wits Business School, 2017. / This explorative study examines the decision making criteria at the screening stage by venture capital firms in South Africa. The study also probes into the decision making criteria on the personality side and whether that has any association with the “big five” characteristics. A threesection questionnaire including both Likert style type (decision making and short version of big five) and nominal questions was sent to venture capital firms. Logistic regression as well as correlation analysis was run on the data. The findings were that individual attributes (entrepreneurs’ characteristics and experience) environment, industry and macro economic environment (characteristics of product and services, characteristics of the market and financial considerations) are all positively related to venture capital firms’ decision to grant finance to an entrepreneur. Findings on the big five characteristics are that only openness to experience, consientiousness and extrarversion were seen as critical considerations by venture capital firms, but not agreeableness and emotional stability characteristics. The study findings are beneficial for entrepreneurs and venture capital firms. / MT2017

Social innovations are solutions related to humanistic needs and the betterment of mankind with the intent of creating social value and eventual societal level changes. Social innovation therefore broadens traditional views of innovation to include processes of societal transformations and human behaviors. These social innovations are becoming more commonplace across all sectors, including capital markets. Private equity and venture capital firms in the capital markets sector engage in social innovation by investing capital with the goal of delivering both economic and social value. Despite the critical importance of venture capital (VC) in the success of social innovations through socially responsible investing, there is a paucity of research in understanding the factors that affect the performance of these social VC firms. This research gap is addressed by asking the following primary research question: What is the role of strategic and structural factors in the performance of socially innovative venture capital firms? The firm level research is theoretically based on the well-established design school. This framework highlights the overarching importance of strategy and structure in the accomplishment of firm goals. In the context of the venture capital industry, it was hypothesized that certain unique strategic and structural factors (i.e., stage of investment, age, size, and network relationships) would influence the performance of socially innovative VC firms. A moderated mediation model was proposed to examine these factors and their influence on performance variation. The sample of socially innovative VC firms was generated from the ThomsonOne Private Equity Database. The research design and methodology followed a systematic and objective process. This included identification of the sample of 381 VC firms, collection of mission statements for each VC firm, development of key word list pertaining to social innovation for content analysis and the collection of archival data on each VC firm. Content analysis was then used to identify the degree to which the firm’s strategic orientation (mission statement) was related to social innovation. Finally, both traditional and more cutting edge statistical analyses (Preacher & Hayes, 2008) were used to evaluate the moderated mediation model. The results of this study provide several key take-a-ways for both researchers and practitioners focusing on social venture capital. Firstly, results indicated that firms adopt distinct foci of social investing that directs their strategic orientation. These various foci have vastly differing effects on the firm’s overall performance, the strategic decisions they make, and the architecture of their structural design. It is therefore necessary to treat each focus area separately given differences in strategies, industry and investment focus, and market orientations. Secondly, including socially related language in the firm’s mission statement does not guarantee that a VC firm will actually implement a social orientation or seek to create the social value inherent in social innovation. Thirdly, certain investment strategies appear to be more advantageous depending of the size of the firm and the socialness of the firm’s orientation. Lastly, results supported that the adoption of a social orientation did not negatively influence firm performance. Overall, results suggest that pursuing a social orientation is viable and effective in delivering blended value strategies for VC firms engaging in social innovation. These findings offers socially oriented venture capital firms insights into strategic and structural aspects that are important to their success in achieving positive exists of their portfolio companies, thus increasing both financial and social value.

This study used protocol analysis to identify key variables in the venture capital investment decision-making process. The study used a fictional business plan which was based on six actual business plans. This fictional business plan was presented to ten venture capitalists who were asked to review it to decide whether to interview the investee. The protocols obtained from these subjects were analyzed to determine patterns within the subjects' review. The sections of the business plan which were commonly reviewed first were the deal structure, the executive summary, and the management section. The management section was used by the greatest number of subjects. The market section was used the greatest number of times. The data were also organized by type of operators used in each subject's protocols. Information Search/Retrieval operators were most common, followed by Task Structuring/Set Goal operators. When classified into the four major categories of Task Structuring/Set Goal, Information Acquisition, Analytical/ Inferential, and Choice operators, Analytical/Inferential operators were used most frequently. Choice operators were least used. The phrases were analyzed by the relevant section in the business plan. The market received the greatest number of references, followed by references to the product and to management. However, when references to the income statement and balance sheet were combined as phrases relevant to the financial statements, the financial statements were referred to more frequently than the product or the people. The subjects appeared to use an unidentified choice program within which certain models could be identified as subroutines. The subjects used an elimination-by-aspects model to screen the business plan. If the business plan met the criteria within the elimination-by-aspects model of the subject, the subject used an additive/nonlinear model for the remainder of the review. The results of this study indicate that financial statements provide information important in the venture capital investment decision-making process. This finding is contrary to the advice usually given to potential venture capital investees.

O venture capital (VC) é uma importante fonte de captação de recursos para as empresas de base tecnológica ao realizar aporte financeiro temporário e suporte gerencial em troca de participação societária. Trata-se de uma alternativa que se enquadra nos estágios iniciais de desenvolvimento das empresas de biotecnologia. A biotecnologia é considerada uma das áreas mais promissores do século XXI e representa o segundo maior segmento investido pelo mercado nos EUA. No Brasil, o mercado de VC é pouco explorado em comparação com os EUA, resultando no menor número de trabalhos realizados nesta área. A contribuição desta pesquisa na literatura está na análise das dificuldades encontradas pelos gestores de fundos de VC e as empresas de biotecnologia no Brasil. A metodologia utilizada contempla entrevistas com gestores de fundos de VC e questionários junto às empresas de biotecnologia. Concluiu-se que as dificuldades estão presentes nas três funções do ciclo de VC analisadas: captação de recursos, investimentos e desinvestimentos. Na captação de recursos, dificuldades relacionadas ao pequeno histórico e cultura de investimentos em VC no Brasil foram constatadas, além da influência de variáveis macroeconômicas, desestimulando os investidores a atuarem neste mercado. Em relação aos investimentos, há diferenças de percepção entre as gestoras e as empresas quanto aos critérios utilizados no processo de seleção, além da dificuldade de se realizar co-investimentos. No aspecto do desinvestimento, a falta de alternativas viáveis de mecanismos de saída disponíveis no mercado de VC nacional força as gestoras a buscarem a venda estratégica. A pesquisa limitou-se a analisar somente o mercado de VC brasileiro e empresas atuantes no segmento de biotecnologia, não sendo objeto de análise o mercado de PE e empresas atuantes em outros segmentos. / Venture capital is an important source of fund raising for technology based-firms by providing temporary financial and managerial support in exchange for equity. It is an alternative that fits in the early stages of development of biotechnology companies. Biotechnology is considered one of the most promising areas of the twenty-first century and it is the second largest segment of the investment market in the USA. In Brazil, the venture capital market is underexplored compared to the USA, resulting in fewer works done in this area. The contribution of this research in the literature is the analysis of the difficulties between venture capitalists and biotechnology companies in Brazil. Methodology includes interviews with venture capitalists and questionnaires with biotechnology companies. It was concluded that the difficulties are present in the functions of the VC cycle analyzed: fundraising, investments and exits. In fundraising, difficulties related to the history and culture of small investments in VC in Brazil have been verified, as well as the influence of macroeconomic variables, discouraging investors to act in this market. Regarding investments, there are differences of perception between venture capitalists and firms as for criteria used in the selection process, in addition to the difficulty to perform co-investments. In the aspect of exits, the lack of feasible alternative exit mechanisms available in the domestic VC market force the management to seek strategic sale. The research was limited to examining only the VC market and Brazilian firms operating in the biotechnology segment, not being subject to analysis the private equity market and firms operating in other segments.

by Chang Wai Kwan, Vincent. / Thesis (M.B.A.)--Chinese University of Hong Kong, 1999. / Includes bibliographical references (leaf 157). / ABSTRACT --- p.5 / INTRODUCTION --- p.6 / METHODOLOGY --- p.11 / FOREIGN DIRECT INVESTMENT IN CHINA --- p.12 / Overview --- p.14 / China Industrial Development & Invitation to Foreign Investors --- p.18 / Driving force for China's industrial development --- p.18 / Evolution of China's industrial policy --- p.18 / China's Framework of National Industrial Policies in the 1990s --- p.20 / China's Ninth Five Year Plan (1996-2000) --- p.21 / Declining Attraction to Foreign Investors? --- p.23 / Cooling of the China Mania --- p.24 / Investment Rationale and Concerns for China Direct Investments --- p.26 / The Paradigm Change for China Direct Investment --- p.27 / How to Maintain China's Competitiveness to Foreign Investors --- p.31 / Chapter 1. --- Stable Economic and Political Environment --- p.32 / Chapter 2. --- Favourable Operating Condition --- p.37 / Chapter 3. --- Transparent Government Policy --- p.38 / Chapter 4. --- Disintegration of Government Political and Business Interests --- p.40 / The Roads Ahead for China --- p.44 / China's WTO Entry --- p.48 / China's World Trade Organisation market access concessions --- p.50 / What WTO entry means for the PRC reform process --- p.52 / To invest in China or not?! --- p.55 / VENTURE CAPITAL BASICS --- p.57 / Industry Growth in the States --- p.59 / The First Wave --- p.60 / The Subsequent Waves --- p.61 / Private Equity Investment Returns and Increasing Popularity --- p.61 / The source of venture capital funds --- p.63 / The Asian Migration --- p.66 / The Emergence of Asian Pioneers --- p.67 / The China Fund Crusaders --- p.73 / First Wave (1986- 1991) --- p.74 / Second Wave (mid-1992) --- p.75 / Third Wave (1993) --- p.76 / Fund management firms --- p.78 / What Entrepreneurs don't Know about Venture Capital --- p.79 / Common Deals Structure and Patterns of Investments --- p.81 / Looking into the Future --- p.81 / Overview of Venture Capital in China --- p.84 / Sources of Venture Capital Funding --- p.84 / Disbursement of Funds --- p.85 / Problems facing VC firms --- p.85 / Conclusion --- p.86 / THE CAPITAL GAP --- p.88 / Asian Emerging Businesses Offer Venture Capital Opportunities --- p.91 / China Business Strategy and Outlook for Venture Capitalists - a SME perspective --- p.92 / Rooting the Finance Gap for SMEs --- p.95 / What do Banks Look for in Making a Small Business Loan? --- p.96 / Venture Capital as a potential alternative financing --- p.97 / Entrepreneurs' Misconceptions for the Venture Capitalists --- p.99 / How Venture Capitalist can help --- p.100 / "Five Stages of Small Business Growth"" model" --- p.101 / Does this business idea work? --- p.102 / Scaling up business operations --- p.102 / Fostering the corporate infrastructure as a platform of growth --- p.103 / Reducing risk level and dynamic financing needs --- p.103 / Linking Financing Needs and Stages of Business Development --- p.106 / Key Investment Concerns of Venture Capitalists --- p.109 / Gap Bridging: Self-Evaluation for Business Plans --- p.111 / Key Elements in Structuring a Private Equity Deal --- p.113 / Partnering with Venture capitalists: a Win-Win situation --- p.113 / Financial Impact on Investee Company --- p.114 / Financial Impact on Investor / Shareholder --- p.115 / Appendix I: Alternative Non-Bank Financing --- p.116 / INDUSTRY ANALYSIS --- p.118 / Michael Porter's Structural Analysis of Industries --- p.120 / Michael Porter's Five-Forces Model --- p.121 / Industry Structure and Equilibrium --- p.122 / Chapter [a] --- Industry Rivalry Factors --- p.123 / Chapter [b] --- Entry Barriers --- p.126 / Chapter [c] --- Substitution Threat Determinants --- p.128 / Chapter [d] --- Suppliers (investee) Bargaining Power Determinants --- p.129 / Chapter [e] --- Buyer (venture capitalists) Bargaining Power Determinants --- p.130 / Refining Michael Porter's Model and Incorporating China Elements --- p.132 / Value and Management --- p.133 / Putting Competitive Strategy into Action --- p.136 / Legal and Regulatory Environment --- p.136 / Legal Aspects of Joint Venture Restructuring --- p.137 / Merger and Acquisitions Opportunities Ahead --- p.141 / Foreign Acquisition of State-Owned Enterprises --- p.141 / Sum Up: Legal Aspects of China Investment Projects Structuring --- p.142 / LESSONS LEARNED --- p.143 / Critical Success Factors for Venture Capital Houses Operating in China --- p.144 / Chapter 1. --- Looks for proven service concepts that can be transplanted into China --- p.144 / Chapter 2. --- Team up with local or foreign industrial partner --- p.145 / Chapter 3. --- Conduct extensive market research --- p.146 / Chapter 4. --- Legal concerns (investment retractions & regulatory frameworks).… --- p.147 / Chapter 5. --- Undertake extensive pre-acquisition due diligence --- p.147 / Chapter 6. --- Maintain active and supportive oversight of investees --- p.148 / Prescription for a Model Venture Capital Investment House --- p.148 / Road-map for a 21st Century Investment House --- p.149 / Chapter 1. --- Focused investment strategy --- p.151 / Chapter 2. --- Global direct investment presence and team-up with industrial operators --- p.152 / Chapter 3. --- Support market leaders and domestic rising star --- p.152 / Chapter 4. --- Multi-facet exit mechanism --- p.153 / Chapter 5. --- Responsive and prompt decision making process --- p.153 / Chapter 6. --- Building deal flow and entrepreneurs networks --- p.154 / Chapter 7. --- Brand recognition --- p.155 / Final Words --- p.155 / BIBLIOGRAPHY --- p.157

<p>En uppsats om Venture capital-företags exitprocess och de faktorer som påverkar under processens gång</p>

There are many different forms of financing for small businesses and two common financing options mentioned in the study, bank loans and Venture Capital.Venture Capital is a form of risk capital financing, investing in unlisted stock market. The feature of the arrangement is that those people are trying to find companies that can offer unique, attractive and in demand products on a strong growing market. Since VC-firms are taking a big risk in cooperation with the investment, the VC-company strong demands while assessments are made on the company will generate a return in the future. Bank loans are the most common form of financing for companies in the market. Requirements and assessment under the law is hard especially for small businesses because financing entails high risks. Banks require that the liquidity management in the enterprise should be stable because the bank's main objective is to repayment of debt and the interest payable on the capital. The purpose of this study is to examine the requirements and assessments VC-firms and banks make use of the financing of small businesses.

En uppsats om Venture capital-företags exitprocess och de faktorer som påverkar under processens gång

Venture capital finances high-risk, high-return projects. In addition to financing, venture capitalists provide advice and expertise in management, commercialization, and development that enhance the value, success, and marketability of projects. Venture capitalists also have skills in selecting projects with potentially high returns. The first chapter investigates the contracting relationship between venture capitalists and entrepreneurs in a setting where the venture capitalist and entrepreneur contribute intangible assets (advice and effort) to a project that are non-contractible and non-verifiable. In general, in the private market equilibrium, advice provided by the venture capitalist and the number of projects funded are lower than the social optimum. Government tax and investment policies may alleviate these market failures. The impact of a capital gains tax, a tax on entrepreneur’s revenue, an investment subsidy to venture capitalists, and government run project enhancing programs are evaluated. Finally, we analyze the effects of a government venture capital firm competing with private venture capital. The second chapter focuses on competition in venture capital markets. We model a three-stage game of fund raising, investment in innovative projects and input of advice and effort, where fund raising is used as an entry deterrence mechanism. We examine the impacts of taxes and subsidies on venture capital market structure. We find that a tax on venture capitalist revenue and a tax on entrepreneur revenue increase the likelihood of entry deterrence and reduce the number of projects funded in equilibrium. A subsidy on investment reduces the likelihood of entry deterrence and increases the number of projects funded. The third chapter examines the venture capitalist's choice of investment in project selection skills and investment in managerial advice. We model, separately, a private venture capitalist and a labour-sponsored venture capitalist (LSVCC) with different objectives. A LSVCC is a special type of venture capitalist fund that is sponsored by a labour union. The private venture capitalist maximizes its expected profits, while the LSVCC maximizes a weighted function of expected profits and returns to labour. Consistent with empirical evidence, the quality of projects, determined by project selection skills and managerial advice, is higher for the private venture capitalist.

Venture capital finances high-risk, high-return projects. In addition to financing, venture capitalists provide advice and expertise in management, commercialization, and development that enhance the value, success, and marketability of projects. Venture capitalists also have skills in selecting projects with potentially high returns. The first chapter investigates the contracting relationship between venture capitalists and entrepreneurs in a setting where the venture capitalist and entrepreneur contribute intangible assets (advice and effort) to a project that are non-contractible and non-verifiable. In general, in the private market equilibrium, advice provided by the venture capitalist and the number of projects funded are lower than the social optimum. Government tax and investment policies may alleviate these market failures. The impact of a capital gains tax, a tax on entrepreneur’s revenue, an investment subsidy to venture capitalists, and government run project enhancing programs are evaluated. Finally, we analyze the effects of a government venture capital firm competing with private venture capital. The second chapter focuses on competition in venture capital markets. We model a three-stage game of fund raising, investment in innovative projects and input of advice and effort, where fund raising is used as an entry deterrence mechanism. We examine the impacts of taxes and subsidies on venture capital market structure. We find that a tax on venture capitalist revenue and a tax on entrepreneur revenue increase the likelihood of entry deterrence and reduce the number of projects funded in equilibrium. A subsidy on investment reduces the likelihood of entry deterrence and increases the number of projects funded. The third chapter examines the venture capitalist's choice of investment in project selection skills and investment in managerial advice. We model, separately, a private venture capitalist and a labour-sponsored venture capitalist (LSVCC) with different objectives. A LSVCC is a special type of venture capitalist fund that is sponsored by a labour union. The private venture capitalist maximizes its expected profits, while the LSVCC maximizes a weighted function of expected profits and returns to labour. Consistent with empirical evidence, the quality of projects, determined by project selection skills and managerial advice, is higher for the private venture capitalist.