What potential do business plan evaluation aids have? - An empirical study on the prospects of success when using decision aids in the investment process

Business plans have, justifiably or not, taken on an important role in the start-up process. They not only serve the purposes of planning and target agreement, they are also an essential instrument for communicating with equity investors. Investors themselves have developed very different methods for evaluating start-up projects on the basis of business plans. Investors often trust their gut feeling. However, they often also use checklists or decision-making aids (so-called Business Plan Evaluation Aids - BPEAs). Basically, BPEAs can be differentiated on the basis of two characteristics: the origin of the decision criteria and the systematisation of the criteria in the application. The selection of the decision criteria to be used can be based either on scientific studies or on the individual perception of the investors. In the application, it is possible to use the criteria purely as a checklist or to summarise them in actuarial terms.

Question of the Diplom thesis:

In cooperation with Extorel, one of the most renowned German venture capital investors, the potential of BPEAs in practice is to be assessed. To this end, the main BPEAs are first to be identified on the basis of a literature analysis and compared with each other. The most promising BPEA is to be identified. This should then be applied to business plans from the Extorel pool. The results are to be compared with the actual performance data of the investments.

Introductory literature:

• <st1:place w:st="on">Chu</st1:place>, P.-C. (1991). A Study of the Influence of a Decision Support Aids on Decision Processes: Exploring the Blackbox. Journal of Information Systems, Vol. 5, No. 2, pp. 1-17.
• Fiet, J.O., Patel, P.C. (2006). Evaluating the Wealth Creating Potential of Business Plans. Journal of Private Equity, Winter 2006, Vol. 10 Issue 1, p18-32.
• Kleinmuntz. B. (1991). Why We Still Use Our Heads Instead of Formulas: Toward an Integrative Approach. Psychological Bulletin, Vol. 107, No. 3 (199(1), pp. 296-310.
• Mitchell, R.K. (1995). New Venture Template, Software based venture analysis tool.
• Mainprize B., Hindle K.(2005). Assessing the Efficacy and Standardisation Potential of Five Competing Venture Capital Investment Evaluation Approaches. Journal of Private Equity, Winter 2005, Vol. 9 Issue 1, pp. 6-21.

Contact person:

Dipl.-Kfm. Michael Schuricht
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