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The Reputation Factor in the Valuation of Startups

Author

Listed:
  • Enrico Gonnella
  • Lucia Talarico

Abstract

This paper analyses the relationship between corporate reputation and valuation, with a special focus on startups. Considering the most accredited scientific and professional literature regarding startup valuation, an attempt has been made to understand if and to what extent reputation can be a value driver in the estimate of startups during the first phases of their life cycle. The authors conducted a systematic literature review, which showed a modest interest in the subject on the part of the scientific community, while – on the contrary – practitioners developed ad hoc methods for valuing startups in their very early stages also considering reputational drivers. These methods are not based on the forecasting of flows and rates, but instead explain the value of the startup with a series of qualitative parameters that are explicitly identified and individually quantified/valued, acting as indicators of the value of the entity. Among the most used approaches are the Berkus Method, the Scorecard Method, and the Risk Factor Summation Method. These methods include reputational factors among qualitative parameters, that is among the value drivers. The analysis and the conclusions reached offer a conceptual contribution and identify a research path that deserves attention.

Suggested Citation

  • Enrico Gonnella & Lucia Talarico, 2023. "The Reputation Factor in the Valuation of Startups," International Business Research, Canadian Center of Science and Education, vol. 16(7), pages 1-56, July.
    • Handle: RePEc:ibn:ibrjnl:v:16:y:2023:i:7:p:56
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    References listed on IDEAS

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    Cited by:

    1. Abraham Ramos-Torres & Laura N. Montoya, 2024. "Evaluating Investment Risks in LATAM AI Startups: Ranking of Investment Potential and Framework for Valuation," Papers 2410.03552, arXiv.org.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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