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Venture Capital in Spain by Stage of Development

Author

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  • Tomás Ramón Pintado
  • Domingo García Pérez De lema
  • Howard Van auken

Abstract

This paper examines the investment decisions of 51 Spanish venture capital firms by stage of development. The results showed that venture capitalists ranked evaluation criteria related to the characteristics of the entrepreneurs, manager background, and management team experience as more important than market and product characteristics. Factors affecting the required rate of return were more important for the early‐stage firms than for late‐stage firms. Discounted cash flow analysis is the most frequently used valuation method. Private venture capital firms invest more during late development stages, while public venture capital firms invest more during the early stages. The results can be used by firms seeking venture capital, venture capital firms, consultants, and support agencies that provide capital‐acquisition assistance. By gaining insight into decision criteria and processes, firms can develop better and more targeted materials to attract capital. Venture capital firms can use the information from this study to better understand their decision processes, individually and relative to competitors. Consultants and support agencies can use the information to provide better advice to both firms and venture capital firms. Information is this study could easily be built into training programs for both new and existing businesses. Finally, the results can also be incorporated directly into university courses that include material related to venture capital.

Suggested Citation

  • Tomás Ramón Pintado & Domingo García Pérez De lema & Howard Van auken, 2007. "Venture Capital in Spain by Stage of Development," Journal of Small Business Management, Taylor & Francis Journals, vol. 45(1), pages 68-88, January.
    • Handle: RePEc:taf:ujbmxx:v:45:y:2007:i:1:p:68-88
    DOI: 10.1111/j.1540-627X.2007.00199.x
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    Cited by:

    1. Delin Du & Jiaoe Wang & Jianjun Li, 2024. "What drives intercity venture capital investment? A comparative analysis between multiple linear regression and random forest," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.
    2. Kok-Bing Poh & Fang-Yi Lo & Kun-Huang Huarng & Ing. Tatiana Masárová, 2024. "Legitimacy theory for digitalization and international strategy of new venture capitalization," International Entrepreneurship and Management Journal, Springer, vol. 20(4), pages 3349-3372, December.

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