In December, 2016 Steve Kaplan (Chicago Booth), Will Gornall (UBC Sauder), Paul Gompers (Harvard), Ilya Strebulaev (Stanford) published a paper called “How Do Venture Capitalists Make Decisions?”. They surveyed 885 institutional VCs at 681 firms to learn how they make decisions across eight areas:
- Deal sourcing
- Investment selection
- Deal structure
- Post-investment value-added
- Internal firm organization
- Relationships with limited partners
The analysis covers many types of startups in different phases of growth as well as VCs with different investment focuses and stages of startup investment. Early-stage startups can learn much from this paper on what they can do to become successfully funded startups that end up either doing an IPO or being acquired.