The Valuation of Technological Startups
26 Pages Posted: 7 Mar 2020
Date Written: May 22, 2019
Innovative startups are newly formed companies with high growth potential which usually absorb a lot of liquidity in the early years of life, in order to finance development, against very limited collateralizable assets. This is unattractive for traditional banking intermediaries, usually replaced by other specialized intermediaries such as venture capital or private equity funds, which diversify their portfolio basing their strategies on a multi-year exit with strong expected increases in value from investments that survive a Darwinian selection. The evaluation of the target companies follows traditional methodologies, flanked by specific features deriving from varied probabilistic scenarios and from multiple exit methods. The technological footprint implies evaluation analogies with patents, know-how and intangibles linked to specific sectors (biomedical, internet, etc.).
Keywords: Innovation; Business Model; Scalability; Internet; Digital Platforms; Value Chain; Private Equity; Venture Capital; IPO; Financial Intermediation
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