September 1987
Background Note
HBS Case Collection

What Do Venture Capitalists Do?

Format:Print
| Pages:20

Abstract

Presents the results derived from 49 responses to a questionnaire mailed to 100 venture capitalists in late 1984. The purpose of the survey was to shed light on the relationship between venture capitalists and their portfolio companies. The survey revealed that the venture capitalists who responded spend about half their time monitoring nine portfolio investments of which five are companies on whose boards they sit. For the latter group of companies, a venture capitalist typically devotes 80 hours of on-site time and 30 hours of phone time to each company in a year. The most frequently performed service for portfolio companies is to help raise additional funds, with strategic analysis and management recruiting also mentioned as important roles. Finally, the venture capitalists in the survey had replaced an average of three CEOs during their careers, and considered weak senior management to be the dominant cause of venture failure.