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New Venture Valuation by Venture Capitalists: An Integrative Approach

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Author Info
Ge, Dingkun (San Francisco State U)
Mahoney, James M. (Federal Reserve Bank of New York)
Mahoney, Joseph T. (U of Illinois at Urbana-Champaign)
Abstract

How to valuate accurately a new venture is a critical and under-researched question in entrepreneurial financing. Leveraging established theories in strategic management, this research study develops an integrative theoretical framework to examine whether venture capitalists' valuation of a new venture can be explained by variables identified in the strategy literature as important to predicting firm-level economic performance. A systematic linkage between well-developed theories in strategy and venture capital valuation practice are corroborated empirically. This research study proposes a complementary method to extant valuation methods to valuate a new venture.

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Paper provided by University of Illinois at Urbana-Champaign, College of Business in its series Working Papers with number 05-0124.

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Date of creation: 2005
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Handle: RePEc:ecl:illbus:05-0124

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Web page: http://www.business.uiuc.edu/Working_Papers/Main.asp
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  19. Godfrey, Leslie G, 1978. "Testing against General Autoregressive and Moving Average Error Models When the Regressors Include Lagged Dependent Variables," Econometrica, Econometric Society, vol. 46(6), pages 1293-1301, November. [Downloadable!] (restricted)
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  22. Zacharakis, Andrew L. & Meyer, G. Dale, 1998. "A lack of insight: do venture capitalists really understand their own decision process?," Journal of Business Venturing, Elsevier, vol. 13(1), pages 57-76, January. [Downloadable!] (restricted)
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  24. Hoang, Ha & Antoncic, Bostjan, 2003. "Network-based research in entrepreneurship: A critical review," Journal of Business Venturing, Elsevier, vol. 18(2), pages 165-187, March. [Downloadable!] (restricted)
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