Opening the black box of venture capitalists' evaluation of entrepreneurial teams

Entrepreneurial teams represent a critical evaluation criterion for venture capitalists (VCs) in the context of making investment decisions. Despite the importance of teams in VCs' new venture evaluation, we lack an understanding of the ways in which VCs evaluate entrepreneurial teams. Using multiple case studies of 15 VCs, we identify five distinct approaches to evaluation: intuitive approach, extended intuitive approach, systematic intuitive approach, psychological rational approach, and scientific rational approach. These approaches vary in terms of the extent to which the VCs performing the evaluation develop structured procedures, incorporate objective data analysis, and spend time on data collection and analysis. Our findings reveal VCs' heterogeneous approaches to evaluation, which feature different combinations of subjective and objective evaluations.