Target location decision
The target location model aims at comparing the drivers of attractiveness of the areas in which different potential portfolio companies can be found. The VC firm is expected to choose the target location that yields the maximum expected returns, all other things remaining equal, because once the money is committed to the selected venture, it can no longer be used for another venture. Therefore, the VC makes a decision in favor of a venture located in a certain area at the expense of investments in ventures located in other areas. The naïve target location model is pictured in Figure 11.
KeywordsTarget Location Investment Opportunity Cultural Distance Multinomial Logit Model Portfolio Company
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