Overruling uncertainty - A study of venture of capital decision making

Abstract

This thesis was initiated due to the fact that venture capitalists' often are the gatekeeper in the funding process of ventures and their impact on fuelling economic growth is likely to increase as the entrepreneurial spirit drives the global economy. In order to find suitable success ventures and develop them from being a promising business idea into a profitable investment, venture capitalists must have a decision making process that contribute to this objective. The fulfilment of this objective is dependent on the VCs ability to manage and facilitate the decision making process. However, when looking at the theories of venture capital decision making, we realised that the there was a need of getting a more comprehensive understanding of how the process handled the problem of uncertainty in the assessed ventures, as well as connecting the criteria to the specific stages of the decision making process. In the study it was concluded that the contingency theory are not totally able to explain the context of a decision making process. Although, it was clarified that venture capital firms use a more or less rational strategy to screen and assess the ventures that apply for venture capital. The decision making process in venture capital firms cannot be said to be the most suitable way of finding the optimal investment objects, however, we believe that it could be seen as the optimal way of finding suitable investment objects.