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Venture capital investors, valuation and information: A comparative study of the US, Hong Kong, India and Singapore

Author

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  • Andy Lockett
  • Mike Wright
  • Harry Sapienza
  • Sarika Pruthi

Abstract

This paper compares the approaches to investee valuation and sources of information used by venture capital investors in the US, Hong Kong, India and Singapore. The results identify significant differences in respect of the use of asset valuation, earnings before interest, depreciation and amortisation (EBITDA) and options based valuation methods. Significant differences are also identified in respect of the use of various sources of information for valuation, notably the use of business plan data, own due diligence, sales and product information and information relating to entrepreneurs.

Suggested Citation

  • Andy Lockett & Mike Wright & Harry Sapienza & Sarika Pruthi, 2002. "Venture capital investors, valuation and information: A comparative study of the US, Hong Kong, India and Singapore," Venture Capital, Taylor & Francis Journals, vol. 4(3), pages 237-252, July.
    • Handle: RePEc:taf:veecee:v:4:y:2002:i:3:p:237-252
    DOI: 10.1080/13691060213715
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    References listed on IDEAS

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    6. Sophie Manigart & Koen De Waele* & Mike Wright & Ken Robbie & Philippe Desbrières & Harry Sapienza & Amy Beekman, 2000. "Venture capitalists, investment appraisal and accounting information: a comparative study of the USA, UK, France, Belgium and Holland," European Financial Management, European Financial Management Association, vol. 6(3), pages 389-403, September.
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    Cited by:

    1. Ron Berger & Ram Herstein & Avi Silbiger & Bradley R. Barnes, 2017. "Developing International Business Relationships in a Russian Context," Management International Review, Springer, vol. 57(3), pages 441-471, June.
    2. David Ahlstrom & Garry D. Bruton, 2006. "Venture Capital in Emerging Economies: Networks and Institutional Change," Entrepreneurship Theory and Practice, , vol. 30(2), pages 299-320, March.
    3. Kwanghui Lim & Brian Cu, 2012. "The effects of social networks and contractual characteristics on the relationship between venture capitalists and entrepreneurs," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 573-596, September.
    4. Jan Smolarski & Neil Wilner & Weifang Yang, 2011. "The use of financial information by private equity funds in evaluating new investments," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 10(1), pages 46-68, February.
    5. Zhiyi Qiu & Rong Chen & Ye Yang, 2021. "Going Abroad, Friends on Board: Cross-Border Venture Capital and Syndication Strategy in China," SAGE Open, , vol. 11(2), pages 21582440211, April.
    6. Cumming, D. & Johan, S.A., 2005. "Is it the law or the lawyers? Investment fund covenants," Discussion Paper 2005-005, Tilburg University, Tilburg Law and Economic Center.
    7. Douglas Cumming & Sofia Johan, 2006. "Is it the Law or the Lawyers? Investment Covenants around the World," European Financial Management, European Financial Management Association, vol. 12(4), pages 535-574, September.
    8. Cumming, Douglas & Johan, Sofia, 2007. "Regulatory harmonization and the development of private equity markets," Journal of Banking & Finance, Elsevier, vol. 31(10), pages 3218-3250, October.
    9. Sofia Johan & Dorra Najar, 2011. "The Role of Law, Corruption and Culture in Investment Fund Manager Fees," Post-Print halshs-00639925, HAL.
    10. Andreas Köhn, 2018. "The determinants of startup valuation in the venture capital context: a systematic review and avenues for future research," Management Review Quarterly, Springer, vol. 68(1), pages 3-36, February.
    11. Wang, Lanfang & Wang, Susheng, 2012. "Economic freedom and cross-border venture capital performance," Journal of Empirical Finance, Elsevier, vol. 19(1), pages 26-50.
    12. Anil Nair & Orhun Guldiken & Stav Fainshmidt & Amir Pezeshkan, 2015. "Innovation in India: A review of past research and future directions," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 925-958, December.
    13. S. De Prijcker & S. Manigart & M. Wright & W. De Maeseneire, 2009. "The influence of international human capital and international network relationships on the cross-border investment behaviour of private equity firms," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 09/597, Ghent University, Faculty of Economics and Business Administration.
    14. Douglas Fuller, 2010. "How law, politics and transnational networks affect technology entrepreneurship: Explaining divergent venture capital investing strategies in China," Asia Pacific Journal of Management, Springer, vol. 27(3), pages 445-459, September.
    15. David Ahlstrom & Garry Bruton & Kuang Yeh, 2007. "Venture capital in China: Past, present, and future," Asia Pacific Journal of Management, Springer, vol. 24(3), pages 247-268, September.
    16. Chortareas, Georgios E. & Girardone, Claudia & Ventouri, Alexia, 2013. "Financial freedom and bank efficiency: Evidence from the European Union," Journal of Banking & Finance, Elsevier, vol. 37(4), pages 1223-1231.
    17. repec:dau:papers:123456789/5830 is not listed on IDEAS
    18. Garry D. Bruton & Vance H. Fried & Sophie Manigart, 2005. "Institutional Influences on the Worldwide Expansion of Venture Capital," Entrepreneurship Theory and Practice, , vol. 29(6), pages 737-760, November.
    19. Johan, S.A. & Cumming, D., 2006. "Corporate social responsibility : domestic and international private equity institutional investment," Discussion Paper 2006-002, Tilburg University, Tilburg Law and Economic Center.
    20. Khan, Muhammad Zubair & Khan, Zafir Ullah & Hameed, Affan & Zada, Shehnaz Sahib, 2021. "On the upside or flipside: Where is venture capital positioned in the era of digital disruptions?," Technology in Society, Elsevier, vol. 65(C).
    21. Aurélie Sannajust & Alexander Groh, 2023. "Pioneering management buy-out and entrepreneurial finance research: Mike Wright’s research legacy," Small Business Economics, Springer, vol. 60(1), pages 1-35, January.
    22. Cumming, Douglas & Fleming, Grant & Schwienbacher, Armin, 2006. "Legality and venture capital exits," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 214-245, January.

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