How VCs Evaluate Investment Opportunities

To learn about the frameworks VC firms use when evaluating potential venture opportunities, Mike Roberts, executive director of the Arthur Rock Center for Entrepreneurship, and HBS senior research associate Lauren Barley recently interviewed four venture capitalists from leading firms in Silicon Valley.

What follows are exceprts from their responses:

"The most important requirement is a large market opportunity in a fast-growing sector...The second factor involves a competitive edge that is long lasting...The third thing is team..."

"We track four things and relate them to the success of our investments: market size, the team, unique technology, and whether the product is developed at the time we invest..."

"In no particular order, for us they are team, market opportunity, and the product/value proposition for the solution. Technology differentiation or business model differentiation is also important to sustain a competitive advantage."

Read more in this HBS Working Knowledge article.

The following are excerpts from their responses."