Why the study is important if we look at it from the point of view of
This transparency in the decision-making process is beneficial. For one, the more entrepreneurs that understand and meet the criteria for VC investment the more options the VCs have in where to allocate their capital.
This is invaluable because to be able to scale-up and make an impact entrepreneurs need capital, and this capital comes from VCs; indeed, a previous Endeavor research effort focused on Chile ranked Access to Capital as the number one challenge in scaling-up. Understanding the exact criteria that Venture Funds use to invest can help entrepreneurs meet those criteria and get the funding they desire.
Understanding what motivates VCs to make certain decisions over others is crucial for designing effective incentives and focus efforts in certain directions.
Funds invest only in 7 out of 200 companies they review over one year
The funnel is highly selective: VCs invest in only
3.5% OF PROSPECTIVE COMPANIES
Of the deals that make it to the funnel,
75% OF DEALS ARE REFERRED
BY A VCs NETWORK:
other VC firms, professional networks, existing portfolio companies, LPs and entrepreneurs in residence.