Abstract:

This study aims to analyze what criteria are used by Venture Capital (VC) firms to value Indonesian tech startups as high-flyer investments. We define high-flyer investment here as start-ups projected to generate return five times or more than its initial investment. We evaluated what criteria are considered more important than the others by VC’s. Research carried out on variables that considered as main aspects evaluated by VC firms are: company, product, and market factors. We used mixed qualitative and quantitative primary data collected through questionnaires for quantitative data and interviews for qualitative data. Logistic regression results revealed that companies with product performance passed the minimum viable product (MVP) phase have a significant chance to value as high-flyer investment compared to those who offer products or services that are not market-proven yet. Sequential qualitative interview findings indicate VC preferences for companies that are fast followers over the pioneers and also suggest that the founder, or human-related aspect, is a critical factor in investment decisions made by VCs.