1.2 RESEARCH OBJECTIVES
The purpose of this investigation is to examine the various
tools, which could be considered in a particular way when it comes to make
investment decisions for new ventures. Because we are, to some extent, in
favour of the second argument mentioned in the end of the previous section, we
will further explore the different methods, whether based on the theory and /
or practical point of view, and used by venture capitals to grant funds to
start-up companies. Indeed, our objectives are:
1. To carry out a meticulous breakdown of the traditional
tools, which could be used to determine what real assets of a newly created
firm the venture capitalist should invest in.
2. To find out which method can be applicable when the
start-up organisation's project in question is to some extent flexible and
reversible.
3. To survey some venture capital firms in order to catch on
what techniques they use in practice to analyse investment project of start-up
industries.
4. And to recommend solutions based on my research, which will
help venture capitalists as well as fresh entrepreneurs to identify what
criteria could be much more suitable to distinguish fruitful ventures from
unsuccessful projects.
The aforesaid purposes required some research questions that
will be explored.
1.3 RESEARCH QUESTIONS
In order to attain the above set objectives, the following
questions are raised:
1. What are the classic methods capable of helping venture
capitalist to make investment decision devoid of any flexibility with regard to
start-up companies?
2. In case the newly created firm's project gets some flexible
and reversible aspects, how should the venture capitalist make investment
decision?
3. What can we learn from an inquiry into the practice of
venture capitalist in the field of determining the investment decision for
newly created companies?
4. Are the findings from the investigation into the way the
venture capitalists make investment decision in practice profitable to both the
main players, namely venture capital firms and new entrepreneurs?
In any case, we should now turn to know more about the answers
from the scientific writings on this topic in chapter 2.
Moreover, chapter 3 constitutes the research methodology while
chapters 4 and 5 are respectively devoted to
data analysis and findings, and conclusion and recommendations.
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CHAPTER II LITERATURE REVIEW
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The purpose of this chapter consists in shedding more light
on the relevant scientific writings referring to the methods ordinarily used by
private equity finance when it comes to make investment decision for start-up
companies. Boosted by what precedes, it would be methodical to define any key
concept of this topic. For that aim, a deductive reasoning will be employed;
therefore this work will by turns scrutinize the concepts of «private
equity» first, «investment decision» secondly and
a wide range of «tools» that allow private equity to determine what
real assets need to be invested in finally. This literature review will then
ended with the bare bones of the main points raised.
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