Purpose The purpose of this paper is to identify and rank critical factors influencing investment decisions of venture capitalists. Design/methodology/approach To identify and prioritize factors affecting investment decisions of venture capitalists, a two-phase methodology was adopted: in the first phase, critical factors influencing venture capitalists’ investment decisions were identified using exploratory factor analysis; the second phase entailed the use of a multi-criteria decision-making technique – analytical hierarchal process (AHP) which involved assigning weights to, and prioritizing the identified criteria and sub-criteria. Findings Seven factors were found to significantly influence investment decisions of venture capitalists: entrepreneur’s characteristics, product or services, market characteristics, management skills, financial consideration, economic environment and institutional and regulatory environment. Findings revealed that entrepreneur’s characteristics, financial consideration and product or services were prime influencers of venture capitalists’ investment decisions. Research limitations/implications As for limitations, first, the study considers limited number of factors influencing investment decisions of venture capitalists; there may be other influencers not considered in this study. Second, the AHP methodology assumes that the various decision-making criteria and sub-criteria are independent of each other; in real life, there may be inter-dependency among criteria. Third, the hierarchal model has been tested in the Indian venture capital industry only, and generalizability of results with respect to other industries is questionable. Practical implications The present study identifies and ranks seven factors found to significantly influence investment decisions of venture capitalists. Venture capitalists could use this list of factors as a guideline before making investment decisions, and if considering all factors is not possible, take into account the factors given top rank so that they arrive at informed and intelligent decisions. Originality/value This study is the first to identify economic factors (economic environment and institutional & regulatory environment) as influencers of venture capitalists’ investment decisions. Further, no study in the past has attempted to rank or prioritize factors influencing venture capitalists’ investment decisions; this is the first attempt of the kind.

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The valuation of a new venture is often considered to be a combative point of negotiation between venture capitalists and entrepreneurs. To bridge this gap, the present study aims to comprehend the link between startup valuation and established strategic management theories. The purpose of this study is to prioritize the theories from the strategic management literature in the valuation of a startup to assess firm performance using evidence from India, an emerging market. This study addresses research questions such as whether strategic theories (internal‐based theory, industry‐based theory, and network‐based theory) enable the valuation of a new venture and how venture capitalists prioritize and vary the importance of these theories to assess the economic value of a new venture. The strategic management theories are prioritized using the fuzzy analytic hierarchy process, a multicriteria decision‐making technique for the valuation of a venture. The present study develops an integrative multicriteria fuzzy decision‐making approach to measure the relative importance of the strategic input variables. The results of the study validate the inclusion of strategic variables and provide a systematic approach to follow and measure the important factors when valuing a new venture. Such outcomes of the study help to theoretically and practically build a valuation foundation for both venture capitalists and entrepreneurs. This study brings increased rigor to the venture capital valuation literature by introducing a supplementary method to identify and measure the importance of these theories in new venture valuation.