The Venture Capitalist's Choice of Exit Strategy

Abstract

Profit is the venture capitalist's ultimate goal. Therefore, it is vital for there to be an optimal exit strategy choice for maximal returns on investment. Few previous studies address the issue of exit strategy, resulting in an absence of full-scale research. The relationships among the influencing factors, exit strategies, and investment duration are probed in this study. Fourteen influencing factors are sorted and separated into five dimensions. The results show that: 1) The better the external economic environment, the less the technical risk, and the more capital and better management and operations of the investee's company, the easier it will be for venture capitalists to construct a good exit strategy; 2) the hypothesis about venture capitalists' financial affairs and investment duration are not supported; and 3) finally, an exit choice strategy equation is constructed in this study by means of which venture capitalists can either learn about important factors or else quickly make an optimal exit decision.