Factors Determining the Performance of Early Stage High-Technology Venture Capital Funds

The purpose of this literature review is to document academic research concerning factors influencing the performances of venture capital funds, as well as the venture capital fundraising decisions. Industry specialisation, large fund sizes, strong deal flow, syndication of investments, and especially, experience, all appear to be factors leading to superior investment performance, which is particularly well illustrated by the US venture capital industry. The review also concludes that venture capital fund returns to a great extent depend on an early or later stage focus, and the timing of the fundraisings. For policy makers the most significant measures, according to the findings, are to nurture a competitive local technology stock market, establish efficient legal frameworks and tax structures, and minimize labour market rigidities.[...]