Venture Capital Firms Valuation in Bull and Bear Markets: Evidence From Sweden

Isaksson, A., & Fredriksen, Ö., Venture capital firms valuation in bull and bear markets: evidence from Sweden. International Journal of Entrepreneurship and Innovation Management, 24(2/3), 97-115, 2020

Posted: 16 Apr 2020

See all articles by Anders Isaksson

Anders Isaksson

Chalmers University of Technology

Date Written: February 28, 2020

Abstract

This study uses an experimentally designed case study approach to investigate Swedish venture capital firms’ valuation practices in two different economic contexts – the economic boom (bull market) of 1999 and the downturn (bear market) of 2002. A key finding in our study is that during economic downturns, venture capital firms employed fewer and less advanced valuation methods – relying more on rules of thumb and gut feeling than during boom times. We conclude that investor behavior is considerably affected by current economic conditions and advocate strongly that it be considered in future research on not only venture capital valuation, but also investor behavior in general. This study thus enriches the knowledge of venture capitalists’ valuation practices, in general and how market conditions affect them. Furthermore, the results can also aid researchers in developing.

Keywords: Venture Capital, Valuation, Asset-Based Valuation, Discounted Cash Flow Valuation, Required Rate of Return, Dot-Com Bubble, Economic Bubbles, Bull Market, Bear Market, Investor Behavior, Sweden

JEL Classification: M13, G24, G32

Suggested Citation

Isaksson, Anders, Venture Capital Firms Valuation in Bull and Bear Markets: Evidence From Sweden (February 28, 2020). Isaksson, A., & Fredriksen, Ö., Venture capital firms valuation in bull and bear markets: evidence from Sweden. International Journal of Entrepreneurship and Innovation Management, 24(2/3), 97-115, 2020, Available at SSRN: https://ssrn.com/abstract=3559281

Anders Isaksson (Contact Author)

Chalmers University of Technology ( email )

SE-412 96 Goteborg
Sweden

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
123
PlumX Metrics