Investment criteria of private equity/venture capital funds and financial performance of companies before initial investment

Zbigniew Drewniak

Abstract


Understanding and recognizing of the investment criteria of private equity/venture capital seems to be crucial for all parties of this market. Entrepreneurs, who are looking for the capital for financing their businesses, can easier find the most proper fund and better formulate their expectations. For the funds, specifying theirs investment criteria is the reflection of the investment strategy leading to its better wording. The fund's investmentcriteriaare also importantfor investors - capital donors. First of allthey wantto knowin whattypes of assetswill be investedtheirfunds. That can help to assess the risk involved in the investment and calculate the expected rate of return. In addition topresentation ofthe investment criteriaof private equity/venture capital funds, thepaper refers to thecompany's financialsituationbefore investments. That draw the company profile, the funds are most interested to invest. The turnover, net profit, profitability ratios and liquidity were analyzed to specify this profile.


Keywords


private equity, venture capital, PE/VC founds

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Print ISSN: 1643-8175 (2451-0947), Online ISSN: 2451-0955, DOI prefix: 10.19197, Principal Contact: tbr@wsb.torun.pl