The average venture capital firm screens 350 companies and makes only four investments in any given year. A recent study from the Journal of Financial Economics surveyed 885 institutional venture capitalists and 681 firms on how they make their investment decisions. The results showed that when selecting investments, VCs focus more on the management team than business-related characteristics like products or technology.
More specifically, the management team was mentioned most frequently both as an important factor (by 95 percent of VC firms) and as the most important factor (by 47 percent of VC firms). Business-related factors were also frequently mentioned as important, with business models at 83 percent, product at 74 percent, market at 68 percent and industry at 31 percent.
