Deriving successful venture capital deal profile through decision tree analysis in Indian context, Sarita Mishra and Dinabandhu Bag
Sarita Mishra
Faculty of Commerce and Management
Sri Sri University, Cuttack
India
School of Management
National Institution of Technology, Rourkela, Rourkela
India
Email: saritamishra02@gmail.com
Dinabandhu Bag
School of Management
National Institution of Technology, Rourkela, Rourkela
India
DOI: 10.1108/WJEMSD-03-2018-0031
Purpose: This study is based on the development of predictive classification for the success of a venture capital (VC) deal derived from both qualitative and quantitative indicators.
Design/methodology/approach: Decision tree analysis has used for devising the success model of VC deal. Various deal characteristics are considered in this study as the observable component of success.
Findings: The finding of this analysis indicates that the success of the deal does not only depend on the final outcome like post company valuation (POST_COMP), realised revenue (RREV) but also depends on various observable contractual characteristics like syndication, use of convertible security and ownership percentage with some noticeable deal features.
Practical implications: This study increases the further scope of study on a contractual mechanisms such as allocation of cash flow right and control right in the deal contract between venture investor and entrepreneur firm. This could give a better understanding of success path of a venture deal.
Originality/value: This study has attempted to derive a performance model based on observable attributes of a VC deal.
Keywords: Success model; Decision tree analysis; Observable component.
Citation: Mishra, S. and Bag, D. (2020), "Deriving successful venture capital deal profile through decision tree analysis in Indian context", World Journal of Entrepreneurship, Management and Sustainable Development, Vol. 16 No. 2, pp. 97-108. https://doi.org/10.1108/WJEMSD-03-2018-0031
