Abstract:
In the last few years, researchers viewed that venture capitalists do
not always follow the same criteria suggested by theory, but use a multi-criteria
decision analysis for screening a new proposal. The first objective of this study
is to identify the criteria used by Indian venture capitalists in investment
decision-making process. Second, it analyses the relationship among predetermined
decision-making factors. Selecting a new venture is a tedious job
for venture capitalists due to the direct and indirect effect of certain factors. For
this purpose, exploratory factor analysis was used to extract the determinants of
investment decision-making process, and interpretive structural modelling was
conducted to establish a hierarchal relationship among key decision-making
enablers. Afterwards, a diagraph facilitates to accomplish the logical
framework as per their relative dependence and driving powers. It is found that
financial consideration is the most important factor that depends on other
driving powers. The findings of the relationship-based approach may help to
mitigate the adverse selection process. The insights of this model would assist
the investors, entrepreneurs and researchers to understand the complex
relationship among significant decision-making factors.
