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VC investors’ venture screening: the role of the decision maker’s education and experience

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Listed:
  • Alexandra Moritz

    (Trier University)

  • Walter Diegel

    (Trier University)

  • Joern Block

    (Trier University
    Erasmus University)

  • Christian Fisch

    (Trier University
    Erasmus University)

Abstract

We assess whether and how VC investors’ education and experience influence their screening decisions of potential investee candidates. Empirically, we perform an experimental choice-based-conjoint (CBC) analysis with 564 individual VC investors. Our results highlight that the level and field of education, as well as the decision maker’s investment and entrepreneurial experience, moderate the relative importance of different screening criteria. More specifically, we find that international scalability seems to become more important for decision makers with higher education and those with entrepreneurial experience. Whereas decision makers with a background in natural science focus on the value-added of the product or service, engineers seem to value a break even profitability and focus less on the management team. Investment experience, on the other hand, leads to a stronger focus on the management team. Our study contributes to the literature investigating the influence of human capital characteristics of the decision maker in venture financing. Practical implications exist for entrepreneurial ventures seeking financing and for risk capital investors making investments in such ventures.

Suggested Citation

  • Alexandra Moritz & Walter Diegel & Joern Block & Christian Fisch, 2022. "VC investors’ venture screening: the role of the decision maker’s education and experience," Journal of Business Economics, Springer, vol. 92(1), pages 27-63, January.
    • Handle: RePEc:spr:jbecon:v:92:y:2022:i:1:d:10.1007_s11573-021-01042-z
    DOI: 10.1007/s11573-021-01042-z
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    More about this item

    Keywords

    Screening criteria; Conjoint analysis; Human capital; Education; Experience;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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