Financial valuation of start-up businesses with and without venture capital
by Michael Lerm; Roland Rollberg; Peter Kurz
International Journal of Entrepreneurial Venturing (IJEV), Vol. 4, No. 3, 2012

Abstract: This paper introduces a three-step model for the financial valuation of business ventures based on the principles of the theory of functional business valuation. It distinguishes between start-up businesses not raising venture capital and those raising venture capital. First of all, the entrepreneur's investment programme has to be optimised ignoring the business venture ('basic programme'). Then, the start-up has to be valued to answer the question, whether it is profitable or not without venture capital ('first valuation programme'). In the third step, the start-up has to be valued once more taking available venture capital into account in order to determine its specific contribution to the value of the new business as a basis for decision making ('second valuation programme').

Online publication date: Thu, 31-Jul-2014

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