Venture Capitalists’ Evaluations of Start-up Teams:Trade-offs, Knock-out Criteria, and the Impact of VC Experience

The start-up team plays a key role in venture capitalists’ evaluations of venture proposals. Ourfindings go beyond existing research, first by providing a detailed exploration of VCs’ team evaluationcriteria, and second by investigating the moderator variable of VC experience. Our results revealutility trade-offs between team characteristics and thus provide answers to questions such as “Whatstrength does it take to compensate for a weakness in characteristic A?” Moreover, our analysisreveals that novice VCs tend to focus on the qualifications of individual team members, whileexperienced VCs focus more on team cohesion. Data was obtained in a conjoint experiment with 51professionals in VC firms and analyzed using discrete choice econometric models....