Venture Capitalists’ Investment Decision Criteria for New Ventures: An Exploratory Study in Morocco

Abstract

The Private Equity (PE) industry in Morocco is one of the most predominant players in North Africancountries. Funds under management in Morocco grew from 40 million USD between 1993 and 1999 to1.11 billion USD in 2016. These developments, together with the recent announcement of the Moroccan government’s vision adopting a new investment scheme provide an opportunity to examine the PEindustry. In the light of the differences in investment opportunities around Morocco and the nature of industrial developments in North African countries’ social context, the authors of this article anticipated that theinvestment criteria used by Moroccan Venture Capitalists (VCs) in their venture screening and evaluationprocesses would differ. Our approach is qualitative and exploratory in nature. Semi-structured interviewswith a short questionnaire were adopted and eight General Partners and two VC consultants were selecteddue to their having greater experience in technology-based ventures funding. The study contributes to theunderstanding and provides insights into the screening process of Moroccan VCs. It is deemed useful insmall equity markets to both VCs in their screening criteria and therefore their decision-making processesand to entrepreneurs in their venture capital applications so as to maximize their success rate.