Multi criteria decision making for assisting business angels in investments

AbstractThe roles of business angels (BAs) are especially important in view of both decreasing the levels of formal venture capital investment and growing the average amount of individual deals. Angel investors typically invest at an earlier stage of growth and provide more business guidance than venture capital providers. Therefore, angel investors are the key players in generating high-growth companies, essential to regional economic development. As a result, they have attracted the attention of policy makers. Thus, this research attempted to improve the conception of decision-making criteria used by the BAs for investment, and reports the findings of an exploratory project that analysed the Malaysian BAs’ decision-making process. A hierarchy of multiple criteria decision making (MCDM) model based on fuzzy sets theory and VIKOR (in Serbian: Vise Kriterijumska Optimizacija I Kompromisno Resenje) method were proposed in order to look into the decision making process. For this reason, 5 main criteria and 2...

[1]  Mike Wright,et al.  Venture Capitalists’ Appraisal of Investment Projects: An Empirical European Study , 1997 .

[2]  Moren Lévesque,et al.  Business angel early stage decision making , 2011 .

[3]  George H. Haines,et al.  Informal Investment in Canada: Financing Small Business Growth , 2003 .

[4]  E. Zavadskas,et al.  A complex proportional assessment method for group decision making in an interval-valued intuitionistic fuzzy environment , 2013 .

[5]  Gwo-Hshiung Tzeng,et al.  Compromise solution by MCDM methods: A comparative analysis of VIKOR and TOPSIS , 2004, Eur. J. Oper. Res..

[6]  M. Sayadi,et al.  Extension of VIKOR method for decision making problem with interval numbers , 2009 .

[7]  Nan Liu,et al.  Risk evaluation in failure mode and effects analysis with extended VIKOR method under fuzzy environment , 2012, Expert Syst. Appl..

[8]  Peide Liu,et al.  The multi-attribute group decision making method based on the interval grey linguistic variables weighted harmonic aggregation operators , 2010 .

[9]  Dean A. Shepherd,et al.  Venture Capitalists' Assessment of New Venture Survival , 1999 .

[10]  Mark van Osnabrugge.  A comparison of business angel and venture capitalist investment procedures: An agency theory-based analysis , 2000 .

[11]  Vance H. Fried,et al.  Toward a Model of Venture Capital Investment Decision Making , 1994 .

[12]  Hans-Jürgen Zimmermann,et al.  Fuzzy Set Theory - and Its Applications , 1985 .

[13]  S. Vinodh,et al.  Application of fuzzy VIKOR and environmental impact analysis for material selection of an automotive component , 2012 .

[14]  Reza Tavakkoli-Moghaddam,et al.  A novel two-phase group decision making approach for construction project selection in a fuzzy environment , 2012 .

[15]  Cengiz Kahraman,et al.  Fuzzy multiple criteria forestry decision making based on an integrated VIKOR and AHP approach , 2011, Expert Syst. Appl..

[16]  Gwo-Hshiung Tzeng,et al.  Comparison among three analytical methods for knowledge communities group-decision analysis , 2007, Expert Syst. Appl..

[17]  I-Shuo Chen,et al.  Innovation capital indicator assessment of Taiwanese Universities: A hybrid fuzzy model application , 2010, Expert Syst. Appl..

[18]  S. Farid Mousavi,et al.  Group decision making process for supplier selection with VIKOR under fuzzy environment , 2010, Expert Syst. Appl..

[19]  J. Wyper,et al.  Towards a model of the business angel investment process , 2007 .

[20]  Ian C. MacMillan,et al.  Criteria distinguishing successful from unsuccessful ventures in the venture screening process , 1987 .

[21]  Andrew L. Maxwell.  Business Angel Decision Making , 2012 .

[22]  Tyzoon T. Tyebjee,et al.  A Model of Venture Capitalist Investment Activity , 1984 .

[23]  Mohammad Jafar Tarokh,et al.  A fuzzy VIKOR method for supplier selection based on entropy measure for objective weighting , 2011, Expert Syst. Appl..

[24]  Richard T. Harrison,et al.  Is it worth it? The rates of return from informal venture capital investments , 2002 .

[25]  Edmundas Kazimieras Zavadskas,et al.  Multi-criteria Assessment Model of Technologies , 2013 .

[26]  T. Baležentis,et al.  An integrated assessment of Lithuanian economic sectors based on financial ratios and fuzzy MCDM methods , 2012 .

[27]  Lotfi A. Zadeh,et al.  Fuzzy Sets , 1996, Inf. Control..

[28]  Gwo-Hshiung Tzeng,et al.  Brand marketing for creating brand value based on a MCDM model combining DEMATEL with ANP and VIKOR methods , 2012, Expert Syst. Appl..

[29]  Ian C. MacMillan,et al.  Criteria Used by Venture Capitalists to Evaluate New Venture Proposals , 1985 .

[30]  E. Zavadskas,et al.  Web-based intelligent DSS for real estate , 2008 .

[31]  Jingzhu Wei,et al.  The Multiple Attribute Decision-Making VIKOR Method and its Application , 2008, 2008 4th International Conference on Wireless Communications, Networking and Mobile Computing.

[32]  G. Meyer,et al.  A lack of insight: do venture capitalists really understand their own decision process? , 1998 .

[33]  George H. Haines,et al.  Private investors' investment criteria: Insights from qualitative data , 1999 .

[34]  Gwo-Hshiung Tzeng,et al.  Combining fuzzy AHP with MDS in identifying the preference similarity of alternatives , 2008, Appl. Soft Comput..

[35]  Nihan Çetin Demirel,et al.  Group decision making process for insurance company selection problem with extended VIKOR method under fuzzy environment , 2012, Expert Syst. Appl..

[36]  Richard Sudek,et al.  Angel Investment Criteria , 2006 .

[37]  Gwo-Hshiung Tzeng,et al.  Extended VIKOR method in comparison with outranking methods , 2007, Eur. J. Oper. Res..

[38]  Hu-Chen Liu,et al.  Induced aggregation operators in the VIKOR method and its application in material selection , 2013 .

[39]  Tao Yan,et al.  Bidding-Evaluation of Construction Projects Based on VIKOR Method , 2007, 2007 IEEE International Conference on Automation and Logistics.

[40]  Jorge Silva,et al.  Venture capitalists' decision-making in small equity markets: a case study using participant observation , 2004 .

[41]  A. Zandi,et al.  Extension of Fuzzy ELECTRE based on VIKOR method , 2013, Comput. Ind. Eng..

[42]  Cengiz Kahraman,et al.  Multicriteria renewable energy planning using an integrated fuzzy VIKOR & AHP methodology: The case of Istanbul , 2010 .

[43]  Dmitry Khanin,et al.  VENTURE CAPITALISTS' INVESTMENT CRITERIA: 40 YEARS OF RESEARCH , 2008 .

[44]  Sarfaraz Hashemkhani Zolfani,et al.  A novel hybrid SWARA and VIKOR methodology for supplier selection in an agile environment , 2013 .

[45]  Sarfaraz Hashemkhani Zolfani,et al.  Performance evaluation of private universities based on balanced scorecard: empirical study based on Iran , 2013 .

[46]  Yi Peng,et al.  Evaluation of Classification Algorithms Using MCDM and Rank Correlation , 2012, Int. J. Inf. Technol. Decis. Mak..

[47]  Edmundas Kazimieras Zavadskas,et al.  Developing a new hybrid MCDM method for selection of the optimal alternative of mechanical longitudinal ventilation of tunnel pollutants during automobile accidents , 2013 .

[48]  Guiwu Wei,et al.  An approach to multiple attribute group decision making with interval intuitionistic trapezoidal fuzzy information , 2012 .

[49]  Peide Liu,et al.  Density aggregation operators based on the intuitionistic trapezoidal fuzzy numbers for multiple attribute decision making , 2014 .

[50]  A. V. Kumar,et al.  Venture Capitalists' Screening Criteria , 2003 .

[51]  Yanbing Ju,et al.  Extension of VIKOR method for multi-criteria group decision making problem with linguistic information , 2013 .

[52]  Richard T. Harrison,et al.  Why 'Business Angels' Say No: A Case Study of Opportunities Rejected by an Informal Investor Syndicate , 1996 .

[53]  Richard T. Harrison,et al.  “Auditioning for Money” , 2003 .

[54]  Romualdas Ginevičius,et al.  The model of forming competitive strategy of an enterprise under the conditions of oligopolic market , 2010 .

[55]  Peide Liu,et al.  A competency evaluation method of human resources managers based on multi-granularity linguistic variables and VIKOR method , 2012 .

[56]  Hans Landström,et al.  INFORMAL INVESTORS AS ENTREPRENEURS , 1998 .

[57]  Gwo-Hshiung Tzeng,et al.  A hybrid dynamic MADM model for problem-improvement in economics and business , 2013 .

[58]  Edmundas Kazimieras Zavadskas,et al.  Market Segment Evaluation and Selection Based on Application of Fuzzy AHP and COPRAS-G Methods , 2012 .

[59]  Andreas Kuckertz,et al.  Evaluation Uncertainty of Venture Capitalists’ Investment Criteria , 2009 .

[60]  Yongtae Park,et al.  Review-based measurement of customer satisfaction in mobile service: Sentiment analysis and VIKOR approach , 2014, Expert Syst. Appl..

[61]  Jurgita Antucheviciene,et al.  Modelling multidimensional redevelopment of derelict buildings , 2008 .

[62]  M. Lévesque,et al.  How entrepreneurs-in-residence increase seed investment rates , 2010 .

[63]  Charles W. Hofer,et al.  Venture capitalists' decision criteria in new venture evaluation , 1993 .

[64]  Heinrich Stedler,et al.  Business angels in Germany: An empirical study , 2003 .

[65]  Serafim Opricovic,et al.  Fuzzy VIKOR with an application to water resources planning , 2011, Expert Syst. Appl..

[66]  Lotfi A. Zadeh,et al.  A fuzzy-algorithmic approach to the definition of complex or imprecise concepts , 1976 .

[67]  Gwo-Hshiung Tzeng,et al.  Defuzzification within a Multicriteria Decision Model , 2003, Int. J. Uncertain. Fuzziness Knowl. Based Syst..

[68]  Eun-Sung Chung,et al.  Fuzzy VIKOR approach for assessing the vulnerability of the water supply to climate change and variability in South Korea , 2013 .

[69]  Gwo-Hshiung Tzeng,et al.  A VIKOR technique based on DEMATEL and ANP for information security risk control assessment , 2013, Inf. Sci..

[70]  Edmundas Kazimieras Zavadskas,et al.  Selecting the optimal renewable energy using multi criteria decision making , 2013 .

[71]  G. Wei,et al.  Extension of VIKOR method for decision making problem based on hesitant fuzzy set , 2013 .

[72]  Sarfaraz Hashemkhani Zolfani,et al.  New Application of SWARA Method in Prioritizing Sustainability Assessment Indicators of Energy System , 2014 .

[73]  Sue Birley,et al.  Trade-offs in the investment decisons of European venture capitalists , 1996 .

[74]  Gwo-Hshiung Tzeng,et al.  Multicriteria Planning of Post‐Earthquake Sustainable Reconstruction , 2002 .

[75]  Kamariah Ismail,et al.  An Application of a Hybrid MCDM Method for the Evaluation of Entrepreneurial Intensity among the SMEs: A Case Study , 2014, TheScientificWorldJournal.