Decision dynamics in investment committees: Improving venture outcomes - 05 Dec 2024

We hosted a breakfast seminar that explored how Swedish venture capital firm decision dynamics differ from their US counterparts. Participants were presented with novel insights from a new research initiative on venture capital investment committees and discussions about whether these differences represent a comparative advantage or disadvantage.

Start time: 2024-12-05 at 08:30

End time: 2024-12-05 at 09:30

Location: On-site at the Stockholm School of Economics.

“It's really a million dollar question how to have an efficient IC setup” - VC investor 1 interview quote

“I mean, I'll be honest and say I haven't seen a gazillion fantastic ICs. I think it is kind of a tricky forum. That's probably why you're doing this study.” - VC investor 2 interview quote

Investment committees (IC) are key decision structures for venture capital (VC) funds where a large portion of investments are formally (de)selected. It can thus be argued that investment committee decisions are a key factor for VC competitive advantage and fund performance.

US VCs have been found to largely use a ‘champion’ rule where one single person can drive the investment decision. The dominant motivation is to ‘catch unicorns’; assumption being that 10x type investments will stand out both on qualities and flaws such that they will not achieve consensus decisions.

At the same time, recent European research indicates major differences between US & Nordic VCs where only ca. 4% of Nordic VCs use a ‘champion’ decision rule and use a wider variety of other decision rules.

Assistant Professor Erik Wetter led the session, focusing on novel insights from a pilot study based on interviews with 30 Swedish VC investors. He clarified the distinct roles and dynamics of Swedish investment committees and discussed whether these differences constitute a comparative advantage or disadvantage.

This breakfast seminar was hosted by the SSE House of Innovation in collaboration with the Swedish House of Finance and the Swedish Private Equity & Venture Capital Association (SVCA).

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