Human Capital Factors of Management Team in Venture Capital Decision

Abstract

Venture capital provides important funding and management experience support for high-tech start-ups. But due to the high risk, final decisions of this investment can only be made after investors evaluate these companies based on observable metrics. Among all the metrics, human capital plays an important role in this evaluation-decision process. Using literature research methods, this paper selects four typical human capital factors of experience, education, passion and gender, and analyzes the mechanism of how they affect investment decisions of these factors. The results have drawn conclusions as follows: First, information on experience, education, and passion conveyed to investors can remove the uncertainty of these firms, while gender factor directly affects decision outcomes. Second, the impact of experience, education, and passion on firm evaluation is complex, which depends on the specific situation. Third, compared with ordinary members of the team, investors pay more attention to the human capital of business leaders.