Entrepreneuring into venture capital

Alex Proimos, Wayne Murray

Research output: Contribution to journalArticle

Abstract

Only a very small proportion of investment proposals attract venture capital. This is because entrepreneurs and venture capitalists (VCs) have differing opinions of when a venture is ready for external investment or considered "investor ready." These differing opinions result, primarily, from the emotionally committed entrepreneur who fails to see the venture from an investor's point of view. The result is a large number of unfunded and disappointed entrepreneurs and frustrated VCs. This article investigates these differences in opinion, and finds that, though entrepreneurs are aware of the fundamental investment criteria used by a VC, they are comparatively overconfident in their assessment of the overall investor readiness of their venture. Investor readiness is determined by examining the technology, market, and management readiness--and gut feel--of a new venture. In response to the findings, the article discusses numerous solutions to increase an entrepreneur's chance of receiving financing from a VC.
Original languageEnglish
Pages (from-to)23-34
Number of pages12
JournalJournal of Private Equity
Volume9
Issue number3
DOIs
Publication statusPublished - 2006
Externally publishedYes

Keywords

  • investment advice
  • financial investment activities
  • consumer lending

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