Toward a contextual heuristic framework of venture capital decision-making

Venture capital (VC) investment strategies are multidimensional and lack uniformity in conceptualization and application. This study aims to identify the criteria used in VC investments, as well as the varying contexts that influence these considerations. Through a systematic literature review, we create a contextual heuristic framework to guide VC investment decision making. The data analysis revealed 19 first-order codes, which were grouped into seven second-order codes and aggregated into four dimensions: market positioning, strategic orientation, operational and financial prospects, and leadership and governance. In addition, the search results uncovered four contextual variables that influence the dimensions taken into consideration by the VC performing the investment analysis: VC investment origination, VC engagement model, VC competence depth and venture stage. The framework informs academic inquiry and practical applications in entrepreneurship and venture capital by enhancing the efficiency and clarity of decision making for entrepreneurs and venture capitalists alike.