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What is Important to a VC Firm?Respondents were asked to rank five important factors that influence their decision to invest, with 5 being the highest rank you could award a factor, 1 being the lowest. These factors were:
The results indicate that all of these factors are of importance to venture capitalists, with quality of the management team by far the most important. All of the factors received an average score of greater than 3 (out of five). The other four factors besides management were all ranked fairly closely together, indicating that entrepreneurs must address all of these factors in the business plans they write and the in-person presentations they make to venture capitalists. Several respondents ranked each category as a "5" and said they viewed them all as critical and could not rate one higher than the other.
The percentage of respondents that awarded "5" to a factor were as follows:
In overall average score (listed in parenthesis), the factors were ranked as follows:
This shows that there is some variation in how the venture capitalists view or weight these factors; for example some VCs were more "growth" oriented than others. Management strength must be emphasized in presentations to investors, and all of these factors must be addressed in order for an entrepreneur to attract capital.
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