Exit strategy decision by venture capital firms in India using fuzzy AHP

Abstract

Purpose The existing literature on venture capitalists’ (VCs’) exits provides insufficient evidence regarding factors affecting the exit decision. This study aims to identify these factors and examine how VC firms do ranking or prioritize these factors. Design/methodology/approach The study is based on primary data. The qualitative analysis was done to develop the survey instrument. Fuzzy analytical hierarchical process, which is a popular method of multi-criteria decision modeling, is used to identify or rank the determinants of exit strategy by venture capital firms in India. Findings Broadly, eight determinants of exit strategy are ranked by VCs. A total of 33 statements describe these eight determinants. The results are analyzed on the basis of four measures of VCs’ profile, i.e. age of VC firm, number of start-ups in portfolios, type of investment and amount of investment. Research limitations/implications The survey instrument needs to be validated with a larger sample size and other financial backers than VCs. Practical implications The study has direct managerial implication for VC firms as it provides useful information regarding the determinants of exit strategy by VC firms in India. These findings can provide necessary information to other financial backers too, viz., angel investors, banks, non-banking financial institutions and other individual and syndicated set-ups providing funding to start-ups. Originality/value The current research is unique as no prior study has explored the determinants of VCs exit strategy and prioritizing these determinants.