The Decision Making Process in the Norwegian Venture Capital Industry

Abstract

This thesis address the venture capital (VC) decision making process and criteria. The vast majority of the research conducted in this field to date has predominantly focused on detecting the decision criteria emphasized by VCs when evaluating prospective ventures. VCs are subjected to a tremendous amount of business proposals, all of which devour the VCs time, regardless of whether the proposal is a potential investment opportunity, or not. A natural part of the screening of these proposals is a VC firm s specialization requirements, meaning their geographic location, stage of funding and industry specialization. In this study, we sampled two VCs which fits within a union of firm specialization requirements, to investigate how the mental process and criteria in the decision making process, specifically the screening phase, constitutes a difference within a seemingly homogeneous group. With utilization of verbal protocol as a method, think aloud, we were able to capture, real time, the decision making policies of two different VCs. With the use of verbal protocols, we have extracted the emphasized criteria of both VCs, in addition to gaining valuable insight in the difference of mental process by the VCs. Furthermore, we argue that the research on decision making criteria is converging to its final state, while there is still new ground to be covered with respect to the mental process in VCs decision making.