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Quantitative valuation of platform technology based intangibles companies

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  • Achleitner, Ann-Kristin
  • Nathusius, Eva
  • Schraml, Stephanie
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    Abstract

    In the course of raising external equity, e.g. from venture capitalists, a quantitative valuation is usually required for entrepreneurial ventures. This paper examines the challenges of quantitatively valuing platform technology based entrepreneurial ventures. The distinct characteristics of such companies pose specific requirements on the applicability of quantitative valuation methods. The entrepreneur can choose from a wide range of potential commercialization strategies to pursue in the course of company development which is difficult to take account of in a quantitative valuation. By developing and applying a systematic map of valuation requirements in this context, we analyze whether the cost, market or income approach is suitable for platform technology based entrepreneurial ventures. We argue that all three valuation methods have drawbacks. Yet, the income approach fulfills most of the requirements and, therefore, is considered to be more suitable for the entrepreneur as well as external equity providers than other quantitative valuation methods. --

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    Bibliographic Info

    Paper provided by Center for Entrepreneurial and Financial Studies (CEFS), Technische Universität München in its series CEFS Working Paper Series with number 2007-02.

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    Date of creation: 2007
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    Handle: RePEc:zbw:cefswp:200702

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    Related research

    Keywords: entrepreneurial venture; platform technology; young venture valuation; quantitative company valuation; intangible assets; intellectual property; commercialization strategies; value extraction;

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    1. Iain Cockburn & Zvi Griliches, 1987. "Industry Effects and Appropriability Measures in the Stock Markets Valuation of R&D and Patents," NBER Working Papers 2465, National Bureau of Economic Research, Inc.
    2. Trigeorgis, Lenos, 1993. "The Nature of Option Interactions and the Valuation of Investments with Multiple Real Options," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 28(01), pages 1-20, March.
    3. Shigeki Kamiyama & Jerry Sheehan & Catalina Martinez, 2006. "Valuation and Exploitation of Intellectual Property," OECD Science, Technology and Industry Working Papers 2006/5, OECD Publishing.
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