Venture Capitalists' Investment Criteria as Determinants of Risk and Return : An Evidence from India

Considering the risk-taking behaviour of VCs and their expectation for higher returns, this paper investigates VCs' investment criteria. Two broad hypotheses tested in a structural equation modelling show that the managerial, market, product, and entrepreneurial characteristics positively affect the returns. On the other hand, market and product characteristics negatively affect the expected risk. Moreover, the expected risk is weakly associated with entrepreneurial characteristics and financial considerations. The study concludes that market and product characteristics are commonly responsible for expected risk and returns