Valuation of Internet Start-ups: An Applied Research on How Venture Capitalists Value Internet Start-ups Nowadays
Master's Thesis from the year 2012 in the subject Business economics - Investment and Finance, grade: none, Business School INSEEC Paris - Bordeaux, language: English, abstract: This dissertation paper deals specifically with the valuation of Internet start-ups after the burst of dot-com bubble. The objective is to contribute to the development of this field of study by filling some of the existing gaps. Indeed, it is a relatively recent subject, and the research devoted to it is still limited. It has been found that the valuation of an Internet start-up does not only depend on its stage of development, but also on five qualitative factors: the team, the business model, the market, the risk, and the exit options. In fact, venture capitalists base their valuation on the perceived growth potential of the company. Subsequently, this dissertation paper addresses the issue of intangible assets. In fact, an Internet company derives most of its value from its intellectual capital, brand equity, and website. These intangible assets, as well as their accounting treatment, are deeply analyzed. It has been noticed the misclassification of their expenses can have a considerable impact on the valuation of the company. The discounted cash flow valuation method, which is based on financial projections, and the relative valuation method, which is based on comparables, are identified and examined in-depth. Their analysis is crucial to determine how to properly value an Internet start-up.
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Overview and Definitions
Dealing with Intangibles Assets
Financial Valuation Methods
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Aswath Damodaran 2010 Bernard Marr 2003 brand equity business angel business model Capital and Real Capital Firm Level Companies with Intangible company’s Comparative Empirical Research Complex Businesses consulted on December Cranfield University DCF valuation method Differences in Venture Discounted Cash Flow dissertation paper dot-com bubble economy Facebook fact fair value Financing of U.S. French Information Technology FT Press German and French High-stakes World IFRS Information Technology Start-Ups Inside the High-stakes intangible assets Intellectual Capital Internet industry Internet start-ups Investment Process IPEV Board Jurgen Garbade 2011 LinkedIn marketing and advertising Michael Jurgen Garbade NOPAT play company pre-money valuation PricewaterhouseCoopers pure play company Real Option Real Option Models relative valuation method Side of Valuation Skype stage of development Start-up Financing Strategy University of Kassel Upper Saddle River Valuation of Intellectual valuation of Internet Valuing Companies Valuing Young Venture Capital Financing Venture Capital Firm Venture Capitalist Warner Books World of Start-up