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Quantitative valuation of platform technology based intangibles companies

Author

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

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.

Suggested Citation

  • Achleitner, Ann-Kristin & Nathusius, Eva & Schraml, Stephanie, 2007. "Quantitative valuation of platform technology based intangibles companies," CEFS Working Paper Series 2007-02, Technische Universität München (TUM), Center for Entrepreneurial and Financial Studies (CEFS).
  • Handle: RePEc:zbw:cefswp:200702
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    References listed on IDEAS

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    1. Cockburn, Iain & Griliches, Zvi, 1988. "Industry Effects and Appropriability Measures in the Stock Market's Valuation of R&D and Patents," American Economic Review, American Economic Association, vol. 78(2), pages 419-423, May.
    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, 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

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

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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