Venture Capitalists’ Appraisal of Investment Projects: An Empirical European Study

Sophie Manigart, Mike Wright, Ken Robbie, Philippe Desbrières and Koen De Waele

Entrepreneurship Theory and Practice, 1997, vol. 21, issue 4, 29-43

Abstract: The Investment appraisal and valuation process of venture capitalists includes Information gathering, the assessment of risk and required return, and the choice of a valuation method. This process is empirically studied in the United Kingdom, the Netherlands, Belgium, and France. The Importance of different information sources is equal in the four countries, except that the French venture capitalists Place more emphasis on personal references and the track record of the entrepreneur. The required return is lowest in the Netherlands and Belgium for every development stage of a company, and highest in the UK. The most widely used valuation method in the UK is the multiplication of past or future earnings with some price-earnings ratio. In the Netherlands and Belgium it is the discounting of future cash flows, and in France it is the book value of the net worth.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:21:y:1997:i:4:p:29-43

DOI: 10.1177/104225879702100403

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