The Impact of Key Factors on the Success of Venture Capital Investment

Abstract

This article analyzes the key factors that affect the investment of venture capitalists: the founding team, the startup's traction, the valuation, the deal structure, and the identity of current investors. Then we analyze the impact of various factors on investment decisions. The research results of this paper indicate that venture capitalists consider multiple factors when investing. Although all five factors in the paper are important, the founding team is the key factor determining the success of the investment. The startup's traction is also important when making the deal selection. The valuation factor will determine how much money the venture capitalist will invest. The deal structure can protect venture capitalists from extreme loss. The identity of current investors is less important but choosing a startup based on the identity of existing investors is also an effective strategy. Together, this paper shows how venture capitalists can choose startups from these five factors. Also, startups can use these results to better understand how they are valued by venture capitalists, how they attract venture capital, and what issues they should pay attention to when negotiating terms.