Can a VC predict if a start up will become bankrupt?

Project Details

Term: 

2010

Students: 

Tressa Joy, Kapila Monga, Rishi Raj Singh, Smitha Purohit, Srividya Varanasi, Vivek Vikram Singh

University: 

ISB

Presentation: 

Report: 

This project intends to help venture capital firms (VCs) in predicting if a start up will become bankrupt or not

Given the high opportunity cost of VC investment, it becomes extremely important for the VCs to choose the companies to invest in very cautiously. VCs get their cash out only when your business is acquired by another company or "goes public," that is, when its shares can be publicly traded on a stock exchange.
Through this project we strive to develop a model based on past data for VCs to predict whether a particular company seeking VC funding would file for a bankruptcy/become defunct in future or not in order to assist the VCs in their decision making.

We thank Prof Sanjiv Das, Leavey School of Business (UCLA) for sharing the data and problem.

Application Area: