Entrepreneurship Development | Journals

The IUP Journal of Entrepreneurship Development

Venture Capital and Entrepreneurship: The Cost and Resolution of Investment Readiness

Article Details

Pub. Date	: December, 2020
Product Name	: The IUP Journal of Entrepreneurship Development
Product Type	: Article
Product Code	: IJED31220
Author Name	: Danai Zana and Brian Barnard
Availability	: YES
Subject/Domain	: Management Journals
Download Format	: PDF Format
No. of Pages	: 44

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Abstract

The study examines Investment Readiness (IR) within Venture Capital (VC) markets and the cost and resolution thereof. IR impacts VC markets, and the efficiency thereof, in a number of ways. The factors and issues that are raised and considered as part of IR include entrepreneurs' experience and business acumen, the quality of opportunities, the perspective of VC firms, the perspective of entrepreneurs, the quality of IR content and services, IR assistance, moderation and accreditation and awareness. In general, IR solutions need to consider cost, quality, coverage or pervasiveness, awareness and assistance. The matter of IR assistance to improve IR requires an in-depth cost-benefit analysis. IR assistance raises the issue of the seriousness of entrepreneurs. The method and technique available to improve IR at no negative impact, typically implies running additional pipelines on the side. There is definitely room and place for technology, also IR metrics as technology, to assist with IR. IR metrics can be further integrated with technology and professional assistance to offer a comprehensive IR tool and solution. This may also be the beginning of turning IR into a competitive advantage. IR metrics should be considered and regarded against their accompanying and corresponding accuracy and success rates, also when considering subsequent and successive IR assessment. IR metrics or IR metric systems can further be secured through moderation. The industry can consider working towards an industry-accepted IR standard. Cost estimates to improve IR equally reveals whether the system is not overextended, requiring rather a focus on quality.

Introduction

Investment Readiness (IR) comprises a significant burden to Venture Capital (VC) markets and forms a principal factor of VC market efficiency. VC bankers frequently refer to IR when explaining the high proposal rejection ratios typical of VC (Mason, 2009; and Mason and Kwok, 2010). VC bankers also spend-and given the approval/rejection ratios, consequently waste-a lot of time on screening opportunities presented to them (Dietz, 2003). The level of IR in a VC market should equally be proportional to the level of entrepreneurship quality in the market.