Venture Capital Firms (VCFs) are agents boosting the process of technology commercialization. They provide young and technology-oriented companies with private equity for a long term. Furthermore, they manage the Venture Capital funds and provide portfolio companies with managerial support. To date, there has not been utilized an adequate analytical model that simply, effectively and objectively measures the VCF's corporate financial performance in comparison to their competitors. In this analytical study we make use of the modified TOPSIS with objective weights (mTOPSISow) (Deng et al., 2000) for inter-company comparison of VCFs to evaluate their relative corporate financial performance and to identify influential Financial Performance Indicators (FPIs). Furthermore, we test and apply mTOPSISow on a sample of five large German VCFs. We come to the result that there is a high discrepancy regarding to the performances of the examined VCFs. Every VCF is geometrically more or less far away from a potential top achievement. Three out of four FPIs are nearly equally important for the final result, whereas one FPI is not influential. Consequently, this study is useful for individual VCFs to identify their relative financial performance and areas of improvement in an objective and simple way.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Literature Review
- Measuring the financial performance of VCFs
- MCDM methodologies and their application on the Venture Capital System
- Methodology
- Application
- Results and Discussion
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis investigates the relative financial performance of Venture Capital Firms (VCFs) by utilizing a modified TOPSIS approach with objective weights (mTOPSISow). The study aims to provide a simple, effective, and objective measurement tool for evaluating the corporate financial performance of VCFs, allowing them to identify areas of improvement.
- Financial Performance Measurement of Venture Capital Firms
- Multi-Criteria Decision Making (MCDM) Techniques
- Modified TOPSIS with Objective Weights (mTOPSISow)
- Financial Performance Indicators (FPIs)
- Relative Financial Performance Comparison of VCFs
Zusammenfassung der Kapitel (Chapter Summaries)
The introductory chapter provides an overview of the significance of innovation and entrepreneurship in economic growth and the role of Venture Capital Firms (VCFs) in technology commercialization. The chapter highlights the challenges in measuring the financial performance of VCFs and outlines the gap in the existing literature that this study addresses.
The literature review chapter discusses established methods for evaluating VCF performance, including traditional financial performance indicators (FPIs). It introduces Multi-Criteria Decision Making (MCDM) techniques and their application in the Venture Capital system, focusing on the TOPSIS methodology and its modified version with objective weights (mTOPSISow).
The methodology chapter presents the mTOPSISow technique, which employs objective weights to assess the relative performance of VCFs. It also discusses the selection of specific Financial Performance Indicators (FPIs) considered relevant for VCF evaluation.
Schlüsselwörter (Keywords)
This research focuses on the relative financial performance of Venture Capital Firms (VCFs), utilizing the modified TOPSIS approach with objective weights (mTOPSISow). The study utilizes Financial Performance Indicators (FPIs) and incorporates Multi-Criteria Decision Making (MCDM) techniques, specifically exploring the application of TOPSIS in a multi-criteria context. The research investigates the statistical dependence between different criteria to assess the influence of FPIs on the overall VCF performance.
- Quote paper
- Kevin Rudolph (Author), 2013, Investigating the relative financial performance of Venture Capital Firms with objective modified TOPSIS approach, Munich, GRIN Verlag, https://www.grin.com/document/300019
