Significance of Criteria for Early-Stage Venture Assessment : Systematic Literature Review

The valuation of early-stage ventures represents a difficult and often subjective process that is characterized by risk and uncertainty. This can be further stressed for technology- driven ventures, having substantial technological risks. We therefore approached existing research on the significance of criteria driving the early-stage technology venture evaluation process in a structured way through means of a Systematic Literature Review (SLR). It could be shown that research deals with an enormous number of criteria that can in principle be included in the evaluation process. However, only a few of them can be assigned a decisive character. It became clear that a positive evaluation outcome is primarily driven by the passion of the venture’s founders, their industry and leadership experience, market growth and the uniqueness of the product. In essence, venture evaluation depends largely on management criteria, and thus an investor’s focus lies primarily on the skills and experience of the founders themselves, with personality characteristics slightly outweighing. The market and product- related criteria seem to be relatively far behind, and so we assume that no positive investment decision would be made if the management shows deficiencies in the qualification, no matter how promising the market or the product itself is. ... mehrIn the end, we found that the market potential in most cases outweighs the product itself, which is astonishing in that the offer of the venture itself moves to the last place in the evaluation.