Investment strategy

Gavin C. Reid, Julia A. Smith

Research output: Contribution to journalArticle


This article reveals new evidence on how venture capitalists evaluate high-tech enterprises. Questionnaires were sent to the UK's most active investors in the high-tech industry, focusing on their use of financial statements, risk reporting and information on internally developed intangible assets. Investors were asked to rate how useful they thought the standard financial accounts they received from potential high-tech investees were. By far the most common response was that standard financial accounts were fairly useless for gauging the value of possible projects. It seems that investors do not see compulsory reporting as a solution to information asymmetry. When asked which particular types of internally developed intangibles they would need valuation information on from the investees, all investors agreed that financial reports provided inadequate information about patents, copyrights and brands, and that they would ask specifically for this data.
Original languageEnglish
Pages (from-to)27-28
Number of pages1
JournalFinancial Management
Publication statusPublished - Feb 2006


  • investment strategy
  • standard financial accounts

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