Ranking Venture Capital Business Plans by Data Envelopment Analysis Method: A Case Study of an Iranian venture capital company

Document Type : Original Article

Authors

Iran University of Science and Technology

Abstract

of Hatef Company
Evaluation in venture capital industry is one of the most challenging issues from practitioners' and researchers' points of view. Limited time of evaluation, lack of financial data especially from ventures, heuristics and biases in evaluating and some other issues differentiate venture capital evaluation process from other investment methods. Also the speed and accuracy of evaluation are two key success factors for venture capitalists. In this paper, we attempt to overcome some of evaluation challenges by using several mathematical methods including data envelopment analysis (DEA), cross efficiency and VIKOR through decreasing screening time, reducing biased effects and enabling group decision-making with variety of weights. This method does not need any weights as they are calculated within the model. For the purpose of this study, some interviews are conducted and domestic criteria are extracted. The performance of the proposed model is investigated with the aid of the Hatef Company case study. Thereafter, we present a group of domestic criteria, and a standard and mathematical method to support decision-making without any needs for criteria weights or normalization. The results derived from the model are similar to the experts' opinions about the best project, but there are not adequate data to compare the ranking of another project with the experts' opinions.

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References

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Innovation Management Journal
Volume 5, Issue 2 - Serial Number 16
September 2016
Pages 87-108

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History

  • Receive Date: 16 February 2016
  • Revise Date: 28 June 2016
  • Accept Date: 25 October 2016

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