Not the first time I’ve run across an article on how VC’s make their investment decisions, but given the amount of time that we spend talking about institutional investors, it makes sense to take another look at this topic. So here is the SF Chronicle article, How Venture Capitalists Make Investment Choices by Ben McClure.
From the article:
With mature companies, the process of establishing value and investability is fairly straightforward. Established companies produce sales, profits and cash flow that can be used to arrive at a fairly reliable measure of value. With early-stage ventures, however, VCs have to put much more effort into getting inside the business and the opportunity.
Here are some of their key considerations:
2. Size of the Market
3. Great Product with Competitive Edge
4. Awareness of Risks