What matters most in technology venture valuation? Importance and impact of non-financial determinants for early-stage venture valuation
by Christoph P. Wessendorf; Jared Schneider; Martin Arda Gresch; Orestis Terzidis
International Journal of Entrepreneurial Venturing (IJEV), Vol. 12, No. 5, 2020

Abstract: The valuation of early-stage ventures represents a difficult and often subjective task. In an attempt to operationalise and objectivise valuation of early-stage ventures, thereby reducing uncertainty, we analyse non-financial determinants of early-stage technology venture valuation through means of an analytical hierarchy process (AHP) and a choice-based conjoint analysis (CBC). To achieve meaningful results in a challenging research setting, triangulation methods were applied. The data obtained from 75 venture capital investment professionals enable us to quantify the relative importance of relevant determinants and derive their impact on valuation. Our analysis shows that entrepreneurial spirit is considered the most important determinant for venture capital investors and a key driver of early-stage technology venture valuation. Next, a strong unique selling proposition (USP) impacts value significantly, followed by intellectual property and market growth. Further, our results demonstrate that valuation determinants do not vary significantly by investor type, i.e., business angel or venture capitalist.

Online publication date: Mon, 30-Nov-2020

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Entrepreneurial Venturing (IJEV):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com