Factors influencing venture capitalists' project financing decisions in South Africa
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2009
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South African Journal of Business Management
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University of Cape Town
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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.
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Reference:
Van Deventer, B., & Mlambo, C. (2009). Factors influencing venture capitalists' project financing decisions in south africa. South African Journal of Business Management, 40(1), 33-41.