A framework for the classification of Iranian venture capital (VC) firms using the "Alkier-Foster" method and extracting the common characteristics of top VC firms

Document Type : Research Paper

Authors

System management and productivity division, Faculty of Industrial and Systems Engineering, Tarbiat Modares University, Tehran, Iran.

Abstract

Aim: The aim of this paper is to provide a framework for classifying the performance of venture capital (VC) firms and extracting characteristics that are effective in their success.
Method: For this purpose, two key performance indicators were recognized by reviewing previous studies, including: rate of return and the number of successful exits of startups. Using the opinions of 5 experts active in the field of venture capital, the classification framework of the Alcaire-Foster method was set. Out of 35 Iranian venture capital firms, 15 firms participated in this research.
Results: Based on the collected information and in the framework of the mentioned method, 4 firms were in the top category, 7 firms were in the middle category and 4 firms were in the less successful category. Factors affecting the success of venture capital, such as reputation, experience, capital size, project stage, field of activity, geographical proximity with start-ups were studied in top and less successful firms. Then, the common characteristics of every VC category were explained by the method of negative center of agreement.
Conclusion: The obtained results show that the top VC firms have bigger size of capital. The said firms have invested the most in internet businesses and have allocated a large share of their investment portfolio to activities such as internet stores, education, medicine and information technology; Also, high activity history, large number of investments, and short distance from start-ups were identified as other factors affecting the success of top venture capital firms in Iran.A

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References

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Journal of Entrepreneurship Development
Volume 16, Issue 3 - Serial Number 61
December 2023
Pages 121-137

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