How do Venture Capital Investors Select Proposals: An Evidence from India.

The purpose of this paper is to explore the parameters, which venture capital investors prioritize while evaluating proposals. The deal selection procedure in actuality is different from the said procedure Zacharakis and Meyer (1998). Therefore, asking Venture Capital (VC) firms to rank each criterion that they use while evaluating a proposal will not be able to capture the true evaluation criteria. Further, VCs' decision varies based on the set of deals on their table. To address this problem, VCs should be asked to reveal the strength and weaknesses of the received proposals in each parameter and then their final decision on those proposals. Therefore, this study examines the decision-making criteria with reference to 441 samples of accepted and rejected proposals. This paper reveals that leadership quality, product/service superiority, revenue projection, and access to foreign market are strong determinant of VCs investment decision. Hence, in deal selection procedure, venture capitalists can reduce their evaluation process to these parameters only. In developing countries like India, availability of information regarding start-ups is highly asymmetric. Therefore, considering a proposal based on these most important parameters will enhance their decision-making process. [ABSTRACT FROM AUTHOR]