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

• Published in: Zeitschrift für Betriebswirtschaft 2022, Vol.92 (1), p.27-63
• Main Authors: Moritz, Alexandra, Diegel, Walter, Block, Joern, Fisch, Christian
• Format: Article
• Language: English
• Subjects: Accounting/Auditing; Business and Management; Business Taxation/Tax Law; Conjoint analysis; Decision making; Education; Educational attainment; Experience; Hierarchies; Human capital; Human Resource Management; Investors; Operations Management; Organization; Original Paper; Screening criteria; Venture capital
• ISSN: 1861-8928; 0044-2372; 1861-8928
• DOI: 10.1007/s11573-021-01042-z

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.