BPVC Methodology
by Lennart Ohlsson
The BPVC methodology was developed by Lennart Ohlsson, an associate professor at KTH’s Centre for Banking and Finance who specializes in venture capital research. Ohlsson is also a founder of the Stockholm Business Angel Group (STOAF Group) and Sustainable Energy Angels.
Best Practice Venture Capital (BPVC)
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Module 1
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Module 2
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Module 3
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Module 4
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Module 5
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The methodology is based on decades of research studying successful American venture capital practices, especially high-performing venture capitalists and funds in Silicon Valley.
T-factor
Technology: uniqueness, IP etc
M-factor
Market existence and potential etc.
K-factor
Competition – actual or potential.
E-factor
Entrepreneurial capacity, or creative brainpower (there is a performance related F-risk)
F-factor
Financing potentials etc.
Predictability and controllability
Only 0,6% of a thousand business plans received by a VC during a year got financed!
The steps of filtering deal proposals:
Upside opportunities (UP)
Summary of an easy-to-recognize, sufficient UP.
Risk
Those who have one or two of the five UP factors that have a high predictable risk or even a significant identified uncertainty have a small probability of success
Uncertainties
Investigate the main uncertainties when doing the final selection.
The steps of Due Diligence focus:
T, M, K factor
T, M, K – windfall gains or losses, sensitivity analyses on opportunities/uncertainties and risks/chances.
E-factor Entrepreneurial
E – windfall gains or losses, personality assessments, competence assessments and contract designs.
F-Factor
VC’s control of financing risks.
