Investigating the relative financial performance of Venture Capital Firms with objective modified TOPSIS approach

Bachelor Thesis from the year 2013 in the subject Engineering - Industrial Engineering and Management, grade: 2,0, Karlsruhe Institute of Technology (KIT), language: English, abstract: Venture Capital Firms (VCFs) are agents boosting the process of technology commercialization. They provide young and technology-oriented companies with private equity for a long term. Furthermore, they manage the Venture Capital funds and provide portfolio companies with managerial support. To date, there has not been utilized an adequate analytical model that simply, effectively and objectively measures the VCF's corporate financial performance in comparison to their competitors. In this analytical study we make use of the modified TOPSIS with objective weights (mTOPSISow) (Deng et al., 2000) for inter-company comparison of VCFs to evaluate their relative corporate financial performance and to identify influential Financial Performance Indicators (FPIs). Furthermore, we test and apply mTOPSISow on a sample of five large German VCFs. We come to the result that there is a high discrepancy regarding to the performances of the examined VCFs. Every VCF is geometrically more or less far away from a potential top achievement. Three out of four FPIs are nearly equally important for the final result, whereas one FPI is not influential. Consequently, this study is useful for individual VCFs to identify their relative financial performance and areas of improvement in an objective and simple way.

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