Factors influencing venture capitalists' project financing decisions in South Africa

Bart Van Deventer and Chipo Mlambo

MPRA Paper from University Library of Munich, Germany

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.

Keywords: South Africa; venture capital; investment criteria; entrepreneur (search for similar items in EconPapers)
JEL-codes: G11 G24 N27 (search for similar items in EconPapers)
Date: 2008-08-31, Revised 2009-02-28
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in South African Journal of Business Management 1.40(2009): pp. 33-41

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