POR SU FUNCIÓN ESPECÍFICA

Equity investors in Germany received approx. 490 business proposals in 2001 (Zimmermann and Fischer 2003), approx. 268 proposals in 2004 (Achleitner et al. 2006) and approx. 220 proposals during the initial phase of the financial crisis (Achleitner et al. 2010). Early-stage investors are far above these average amounts and received approx. 550 proposals in 2001, 324 proposals in 2004 and 335 proposals per year during the initial phase of the financial crisis (Achleitner et al. 2010). Due to the overall large number of investment proposals, the initial evaluation of business plans is a time-limited process. Approx. 20% of the respondents in the research study of Reißig- Thust (2003) reported an initial screening period between ten and 20 minutes per business plan, whereas approx. 13% of the respondents reported a period between 20 and 30 minutes. Finally, 53% of the respondents reported an initial screening period of 30 minutes. These screening durations are rather small in relation to the content of a standard business plan. In the normal case a business plan contains an executive summary and more detailed sections regarding research and development, procurement and production, market and product, marketing and sales, management team, organisation, patents and proprietary rights. Finally, a business plan contains a financial statement and a forecast (Stahl 2003).

The literature review shows that different types of investors have different weightings regarding the importance of each review field. Vater (2002) was research active regarding the initial and

the detailed screening of equity investors in Germany. According to his research results, the financial forecast, the management team, the product and the market, and past financial statements are regarded as the most important review fields during the initial screening. These results apply for the entire market but the more detailed interpretation shows that venture capital investors are also focused on exit possibilities. Interestingly enough, this issue is regarded as the most important point in the initial screening of venture capital investors (Vater 2002). Tyebjee and Bruno (1984), in earlier times research active regarding VCs investment focus, mention that the majority of their sample members simply check the size of the investment, the market and the technology, the financing stage and, in some minor cases, also the geographic location. Overall, the further review of the literature base leads to the assumption that investors are clearly focused on product’s differentiation, market’s attractiveness and the cash potential of their investment (Tyebjee and Bruno 1984; Brettel 2002; Kollmann and Kuckertz 2004). In addition, the literature base shows that the management team is surely one of the most important issues in the investment decision process of investors (Tyebjee and Bruno 1984; Brettel 2002; Vater 2002; Kollmann and Kuckertz 2004; Mason and Stark 2004). In that respect, Franke et al. (2004) detail the management team criteria in the initial screening phase and refer to:

the importance of market knowledge; the type and level of team qualification;

the team coherence and earlier human resource responsibilities.

Brettel (2002) with regard to the German VC market mentions the relevance of market knowledge too, but, furthermore, refers to team spirit, risk orientation, resilience and integrity as important decision factors too. Moreover, the management team should have different skills in different areas which must be complementary in the respective team (Brettel 2002; Kollmann and Kuckertz 2004). Beside these rather similar assessments of management team’s importance, Petty and Gruber (2011), interestingly enough, argue that the management team is not as important as overall indicated. They mention that there is still the possibility of replacement prior or during the investment period in a majority of cases. This conclusion is based on the analysis of 3,631 deal proposals and finally 35 investments during a period of 11 years. This interesting research study, even though limited to one European-based venture capital firm, moreover, sees influences in the decision making due to economic circumstances. Petty and Gruber (2011) clarify that economic upturns are associated both with an increase of funds volume and an increasing number of incoming business proposals. This situation results in an increasing number

of proposal rejections on the one hand and an increase in the relevance of product and service related issues on the other hand. With regard to such economical influences, Kollmann and Kuckertz (2004) analysed changes in the decision making process during the millennium turn. Even though their research findings are based on a purposive selection of ten technological oriented VC firms in Germany, Austria and Switzerland, their research results disclose changes in the initial screening process. They argue that investors are focused on such products which are able to realise sufficient returns in different markets. Thus, innovative products which are limited on market niches are not considered for investments as a consequence of the economic decline during the millennium turn.

At the end of the initial screening, approx. 80% of the proposals are rejected (Nathusius 2001; Franke et al. 2004). In Germany, approx. 20% of the proposals in 2001, approx. 16% in 2004, and approx. 21% per year during the initial phase of the financial crisis were considered for a detailed analysis (Zimmermann and Fischer 2003; Achleitner et al. 2006; Achleitner et al. 2010). That means that the proportion of due diligences between 2001, and the initial phase of the financial crisis more than halved in relation to the decreasing number of business proposals. The due diligence proportions also vary according to the specific type of investor. Results for the initial phase of the crisis show that early-stage investors considered approx. 15% of the incoming proposals for a detailed analysis, whereas the MBGs considered approx. 55% (Achleitner et al. 2010). These results for the MBGs are also far above in comparison to the average proportion of 21% (Achleitner et al. 2010) in the entire market. The ratio of the MBGs in that respect should be interpreted with care as the MBGs prefer silent investments on the one hand and are investing in comparatively smaller investment amounts on the other hand. It should not be concluded that their due diligence procedures are comparable to these of the remaining market members.