Delivering a Systematic Framework for the Selection and Evaluation of Startups

The literature shows that the failure rate of startups is around 90%. Therefore, it is crucial for investors and financial advisors to be able to spot the 10% which eventually will generate higher return rates and bring in greater revenues. The absence of a general conceptual framework which could assist large corporations and investors in the selection and evaluation of startups is quite visible in the literature. In this research, critical success factors for strategic alliance making between startups and large sized companies are identified and possible selection methods are discussed. Second, based on our findings a conceptual framework is presented for the selection of successful startups. Semi-structured interviews are conducted at a large scale financial tech company to evaluate our proposed framework. The results of our expert interviews indicate that all the managers who were involved in the selection process of startups agree on the fact that the team experience and the startup’s position within its network are highly related to the success of the startup in the future. Furthermore, characteristics of the lead entrepreneur, competitive advantage of the firm’s products and the valuable resources the startup has are also ranked among the criteria which managers look into and have strong influence on their decision making.