Category - Waheed CHICKTAY

WITS Business School, University of the Witwatersrand, South Africa


Venture Capital Process: Opportunity Selection, Monitoring, Capital Rationing, and Deal Flow

The study investigates specific characteristics of the venture capital market: opportunity selection, monitoring, capital rationing, as well as deal flows and channels, in greater depth. It covers a developing market (South Africa) and uses qualitative methodology. Quality of opportunities is generally low, impacting industry efficiency through increased opportunity costs. Markedly about the assessment of applications, is the degree of structure to the process, and intuition involved. At the post investment stage, portfolio companies are managed in a variety of ways, including providing strategic and operational structures and insight, as well as shared services to enhance business functions. In certain cases, capital rationing prevails in the VC market. Deal referral is an important source of opportunities, underscoring the importance of a network and strong reputation. Overall, the VC market is still in its infancy, with a lack of awareness of both its existence as well as its...

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