DOCSLIB.ORG

Start-Up Valuation for Internal Corporate Venture of PT Telekomunikasi Indonesia Tbk (Case Study: Venture B)

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Start-Up Valuation for Internal Corporate Venture of PT Telekomunikasi Indonesia Tbk (Case Study: Venture B) EJBMR, European Journal of Business and Management Research Vol. 4, No. 5, September 2019 Start-Up Valuation for Internal Corporate Venture of PT Telekomunikasi Indonesia Tbk (Case Study: Venture B) Cynthia Ghaida Subroto and Subiakto Sukarno unicorn start-ups if the company does nothing. Abstract— To adapt with phenomenon in industry 4.0 which To adapt with the phenomenon, Telkom is now disruptive technology quickly emerges and can threaten many transforming to become a digital telecommunication companies, PT Telekomunikasi Indonesia Tbk (Telkom) company as the vision of the company is “Be the King of implements internal corporate venturing by establishing Digital in the Region” with mission “Lead Indonesian Amoeba Digital Program that is lab to manage innovation by employees who form a team named Amoeba. Amoebas are Digital Innovation and Globalization”. One way to achieve incubated by adopting lean start-up methodology thus they can the goal is by implementing internal corporate venturing be considered as a start-up. They have to go through steps of through establishment Amoeba Digital Program that is innovation journey and after all the steps are passed and there corporate innovation lab from Telkom to manage innovation is potential upscale revenue, they will become Business As by employees who form a team named Amoeba. Usual of Telkom. Venture B is one of Amoebas that has Amoebas are incubated by adopting lean start-up launched its product and generated revenues. However, recent Venture B’s revenues is decreasing, thus Venture B needs to methodology thus they can be considered as startups. Each implement new business model and needs more financing. A Amoeba has to go through innovation journey that consists problem confronting Telkom as the parent company which of five steps which are Idea Generation and Validation, provides the venture capital is determining the value of the Customer Validation, Product Validation, Business Model venture to determine whether funding should be provided. Validation, and Market Validation. Amoebas will be fully Therefore, this research is conducted to give insight on how funded by Telkom as the parent company as they passed much the venture is really worth and how Venture B will be going in the future. Methodology used in this research is both each step. Amoebas that have passed all the steps, have qualitative and quantitative approach to understand the reached zero EBITDA, and show potential upscale revenues business situation and get a picture of the venture in a form of will exit and become Business As Usual of Telkom. numbers or value. Combined of Damodaran and First Chicago Venture B is one of Amoeba that has launched its method will be used to value the venture considering these product, generated revenues, and reached Market Validation methods can overcome issues emerged in valuing start-up company and provide better view on Venture B’s overall step. It gives services in selling digital game voucher and potential through combining the value of three different other digital voucher for merchants especially internet cafes scenarios. The value of Venture B with new business model that will sell online voucher to gamers. It should have been then will be compared with the value of Venture B with exit soon and become Business As Usual. However, recent existing business model. From the result, Telkom can know Venture B’s revenue is decreasing, thus Venture B needs to how much Venture B is really worth which can help Telkom implement new business model, repeat the innovation determine future strategy. journey from Customer Validation, and needs additional Index Terms—corporate venturing, Damodaran method, fund to develop the new business. First Chicago method, start-up, valuation A problem confronting Telkom as the parent company which provides the venture capital is determining the value of the venture to determine whether funding should be I. INTRODUCTION provided. If the proposed product or service provided by the Nowadays, the world including Indonesia is facing venture has no value or benefit to the company, then it industry 4.0 which in this era, disruptive technology quickly should not be developed. Valuation can be a way to give emerges and can threaten many companies that are not agile insight on how much the venture is really worth and how in adapting to the growth of technology. Successful Venture B will be going in the future. companies are companies that can fulfil people needs with Venture B was established in 2017. Since then, there are digital innovation, even start-up companies can defeat 8,095 registered merchants with 4,161 of them are active mature corporations. These new start-ups could be a threat merchants that spread in various regions across all island in for PT Telekomunikasi Indonesia Tbk, or in short Telkom, a Indonesia. It also does not have any competitors that doing state-owned and the largest information and communication the same business. Currently Venture B is selling PC game technology enterprise and telecommunications network in vouchers from seven games that are PCgame1, PC game2, Indonesia. In few years, Telkom may be defeated by the PCgame3, PCgame4, PCgame5, PCgame6, PCgame7. They also sell electricity (PLN) voucher and receive payment of PLN Postpaid, phone credit, and internet voucher. Cynthia Ghaida Subroto is with the Master of Business Administration, In the new business model, Venture B will sell PC game Bandung Institute of Technology, Ganesha St. 10, Bandung, 40132 voucher as existing in addition with mobile games voucher Indonesia (e-mail: [email protected]). Subiakto Sukarno is with the Master of Business Administration, from three games and bundling of Wi-Fi and In Game Bandung Institute of Technology, Ganesha St. 10, Bandung, 40132 Treatment voucher through merchants that are internet cafés Indonesia (e-mail: [email protected]). DOI: http://dx.doi.org/10.24018/ejbmr.2019.4.5.98 1 EJBMR, European Journal of Business and Management Research Vol. 4, No. 5, September 2019 or game centers. The In Game Treatment voucher is actually the cheapest mobile game voucher in every game that Venture B sold. Bundling voucher will be sold to be used for two hours. The venture will no longer sell PLN, phone credit, and internet voucher to focus its portfolio as game voucher provider. In the implementation, Venture B will make partnership with Wi-Fi Corner (WiCo), product from Divisi Business Service (DBS) of Telkom to provide the Wi-Fi infrastructure and voucher. II. LITERATURE REVIEW A. Corporate Venturing Corporate venturing or corporate entrepreneurship is the process by which individuals inside organizations pursue Fig. 1. Business Life Cycle opportunities independent of the resources they currently Source: Damodaran, 2012 control [9]. The process involves new venture creation within existing organizations and the transformation of C. Valuation organizations through strategic renewal. If the new venture Valuation is the process that links risk and return to is created within the parent company’s organizational determine the worth of an asset [7]. There are three key domain, it is called internal corporate venturing. The aim of inputs to the valuation process which are cash flows corporate venturing is to improve company’s competitive (returns), timing, and risk which determines the required position and financial performance. return. The value of a firm is the present value of expected Funding the venture might be the most important aspect cash flows generated by it, discounted back at a composite to analyze because in any organization, funds are limited cost of capital that reflects both the sources and costs of thus financing requires good financial justification. The financing used by it [3]. Valuation is based on intrinsic venture must demonstrate detailed financial projection to the value of a company such as cash flow, assets, risks, and parent company to convince them investing in the venture. growth. Although it is a quantitative method, the inputs of The financial projection must show the potential for a return valuation leave plenty of room for subjective judgements. on the investment. Revenues and costs should be indicated However, there will still be uncertainty about the final through pro forma income statement. numbers even at the end of the most careful and detailed To decide whether funding should be provided for the valuation. venture, its value should be determined by considering Valuation of start-up and established company is different characteristics of the industry which the venture operates because the characteristics of the company itself is different. and growth of future markets. Nonfinancial factors should Valuing business in the earlier stages in a life cycle is more also be considered such as the uniqueness of the idea, its challenging and difficult than valuing mature business since contribution to the company, the synergies of the idea with there is little information about the company. company’s capability, length of time development, amount of investment involved, strength of the venture team, and D. Start-Up Valuation Alternatives possibility for more products or services. According to [20], there are two valuation methods for B. Start-Up start-up that are traditional method and alternative method. Traditional methods consist of Discounted Cash flow The term start-up describes a company in the early stage (DCf) method, market multiple method, and comparable of the business life cycle with a high degree of innovation transaction method. Alternative methods consist of Venture looking for capital resources. Start-ups have to develop a Capital (VC) method, first Chicago method, Damodaran scalable business model and a business plan. They depend method, Real Option method, Valuation of Intangibles, on sufficient capital for realization of their business idea. Cayenne Consulting Calculator, Dave Berkus Valuation Reference [3] shows that the characteristics of start-up or model, Scorecard Valuation method, and Risk factor young companies are no or have limited histories, small or Summation method.
Load more

Recommended publications
  • Evaluation of Young Companies / Startups Based on the Multiples
    Hochschule für Wirtschaft und Recht, Berlin Wintersemester 2017/18 Bachelorarbeit Erstprüfer: Dipl.-Kfm. Reinhard Borck Zweitprüfer: Prof. Dr. Martin Užik Evaluation of young companies / startups based on the multiples approach and DCF method Eingereicht von: Abdürrahim Derin Martrikelnummer: 461885 Studiengang: IBAEX, BA Eidesstattliche Erklärung Hiermit erkläre ich an Eides Statt, dass ich die vorliegende Abschlussarbeit selbstständig und ohne fremde Hilfe verfasst und andere als die angegebenen Quellen und Hilfsmittel nicht benutzt habe. Die den benutzten Quellen wörtlich oder inhaltlich entnommen Stellen (direkte oder indirekte Zitate) habe ich unter Benennung des Autors/der Autorin und der Fundstelle als solche kenntlich gemacht. Sollte ich die Arbeit anderweitig zu Prüfungszwecken eingereicht haben, sei es vollständig oder in Teilen, habe ich die Prüfer/innen und den Prüfungsausschuss hierüber informiert. Name, Vorname: Derin, Abdürrahim Matrikelnummer: 461885 Ort, Datum Unterschrift Abstract In this paper the concept of startups is explained in more detail, occasions for the valuation of these type of companies and the procedures for determining the company value presented. Two processes, the Multiples approach and the DCF method are applied to one example case. Finally, the results of both methods are compared and evaluated. For future work, there are also further possibilities for company valuation by young companies. Table of Contents 1. Introduction ..............................................................................................................
    [Show full text]
  • Valuing Young Startups Is Unavoidably Difficult: Using (And Misusing) Deferred-Equity Instruments for Seed Investing
    University of New Hampshire University of New Hampshire Scholars' Repository University of New Hampshire – Franklin Pierce Law Faculty Scholarship School of Law 6-25-2020 Valuing Young Startups is Unavoidably Difficult: Using (and Misusing) Deferred-Equity Instruments for Seed Investing John L. Orcutt University of New Hampshire Franklin Pierce School of Law, Concord, New Hampshire, [email protected] Follow this and additional works at: https://scholars.unh.edu/law_facpub Part of the Banking and Finance Law Commons, and the Commercial Law Commons Recommended Citation John L. Orcutt, Valuing Young Startups is Unavoidably Difficult: Using (and Misusing) Deferred-Equity Instruments for Seed Investing, 55 Tulsa L.Rev. 469 (2020). This Article is brought to you for free and open access by the University of New Hampshire – Franklin Pierce School of Law at University of New Hampshire Scholars' Repository. It has been accepted for inclusion in Law Faculty Scholarship by an authorized administrator of University of New Hampshire Scholars' Repository. For more information, please contact [email protected]. 42208-tul_55-3 Sheet No. 58 Side A 05/15/2020 10:30:18 ORCUTT J - FINAL FOR PUBLISHER (DO NOT DELETE) 5/14/2020 9:49 AM VALUING YOUNG STARTUPS IS UNAVOIDABLY DIFFICULT: USING (AND MISUSING) DEFERRED- EQUITY INSTRUMENTS FOR SEED INVESTING John L. Orcutt* I. ASTARTUP’S LIFE AND FUNDING CYCLES ............................................................... 474 II. VALUING YOUNG STARTUPS .................................................................................
    [Show full text]
  • Politecnico Di Milano
    POLITECNICO DI MILANO SCHOOL OF ARCHITECTURE URBAN PLANNING CONSTRUCTION ENGINEERING Management of Built Environment Facility Management in Iran, a New Approach Towards Customer Service Academic Year 2017/18 Supervisor: Professor: Prof. Andrea Ciaramella Co-supervisor: PhD Candidate Alberto Celani Thesis of: Mehdi Poorfarsi 840761 Contents FIGURE INDEX ............................................................................................................................................. 4 TABLE INDEX ............................................................................................................................................... 7 Abstract ...................................................................................................................................................... 9 CHAPTER ONE ........................................................................................................................................... 11 Definitions ................................................................................................................................................ 11 1.1) Map of Thesis .................................................................................................................................... 12 1.2) Maintenance ..................................................................................................................................... 12 1.2.1) Maintenance types ......................................................................................................................
    [Show full text]
  • Can the Crowd Bridge the Cleantech Financing Gap? a Comparative Analysis of Equity Crowdfunding and Venture Capital Returns in the US
    Can the Crowd Bridge the Cleantech Financing Gap? A comparative analysis of Equity Crowdfunding and Venture Capital returns in the US Harvard Extension School ALM in Extension Studies, Field: Sustainability Student Name: Seif Belhani HUID: 91171260 May 2019 Can the Crowd Bridge the Cleantech Financing Gap? ii Abstract Sustainability has become one of the most discussed topics on the social, economic and political stages. While many experts and policymakers acknowledge the need for funneling more capital towards clean technologies (Cleantech) in order to achieve a genuine transition to a more sustainable economy, there is growing evidence that the current efforts are not only insufficient but that investments in the green sector are, in fact, decreasing. This is particularly true for the early stages of Cleantech innovation. This paper explores new private capital models which can help bridge some of that financing gap. Specifically, the central question asked in this project is whether Equity Crowdfunding can be a viable alternative, as an investment vehicle, for investors interested in Cleantech as well as a source of reliable funding for entrepreneurs. The United States provides the geographic focus of this research. From 2012, the US JOBS Act opened the privilege previously reserved to professional investors, such as venture capitalists, by allowing “non-accredited” investors to acquire equity shares in startups through licensed crowdfunding platforms. In terms of methodology, this capstone is based on a comparative analysis of the financial returns of three financial protagonists; Equity Crowdfunding, Cleantech-focused Venture Capital (VC) and diversified VC. Drawing on the pioneering work of Signori (2017) and Gaddy (2016), the results of this analysis show that, although Cleantech Equity Crowdfunding lags behind diversified VC, it has performed significantly better than Cleantech VC over the same investment horizon.
    [Show full text]
  • The World of Startup Valuations Magic, Mystery Or Craft?
    The World of Startup Valuations Magic, Mystery or Craft? AUGUST Valuation Investment Banking Restructuring Advisory Services 2019 Content 1 Foreword 2 Introduction to Start-ups 3 Growth Stages for a Start-up 4 Funding Stages for a Start-up 5 Valuation Methods for valuing Start-ups 5.1. Venture Capital Method 5.2. Berkus Method 5.3. Scorecard Method 5.4. Risk Factor Summation Method 5.5. First Chicago Method 5.6. Backsolve Method 6 Concluding Remarks The World of StartupValuation Valuations Methods – Magic, for ValuingMystery Start-ups or Craft? 02 FOREWORD The dotcom bubble of the 2000 was one of the most phenomenal disruption that took place in the history of equity markets. Also known as the internet bubble it was a surge in the prices of stocks in the U.S. primarily pertaining to Internet / Tech companies. This was supplemented by the bull market run around the same time which fueled the upsurge in prices. From 1994 to 2000 the equity stock of these so called “Internet-Based” Companies grew aggressively 5x-6x. Such exponential growth was driven by the sentimental estimates of analysts/investors that, internet would be the next big thing. Nevertheless, the internet did end up being a phenomenon. However the value expectation may have been slightly over-estimated. The entire episode led to the crashing of NASDAQ with an estimated loss of $ 5 trillion in Market Capitalization. The aftermath being NASDAQ taking 15 years to recover its all time high it once honed at the peak of the dotcom bubble which can be seen in the figure shown below:
    [Show full text]
  • Differentiated Diligence After
    Tech - Startup Investments Round Up Tracking the funding space in MENA Region and Turkey Q2 2021 KPMG in Qatar August 2021 home.kpmg/qa Introduction KPMG in Qatar welcomes you to the second edition of Tech – Startup Investments Round Up, where we bring you the quarterly highlights from the Technology and Startup funding space in the MENA Region and Turkey. Given the events of the past year, it would not have been surprising to see negative sentiment around startup performance and a drop in investor and founder confidence. However, this has not been the case. Gaining momentum from the first quarter, the second quarter of 2021 witnessed record level funding in the region, continuing the trend that was observed during the pre-pandemic period. Further, in this edition of the report, we dive into the growing technology and startup ecosystem in Qatar. Interestingly, Qatar is experiencing an accelerated growth in its tech- startup industry. The startup funding in Qatar has taken a significant stride of approximately 182 percent during H1 2021, closing the first half with 10 deals and a total funding amount of $31 million. This document also throws some light on valuation methods for startups as these cannot be valued in the same way as a traditional business. In this document, we have critically evaluated different methods of calculating a startup’s valuation and summarized the conceivable process and approaches. Indeed, calculating the true value of a startup is a challenging exercise and several factors need to be taken into consideration. We believe that the compiled information would be a valuable and informative read.
    [Show full text]
  • Startups Valuation: Approaches and Methods
    CHAMBER OF INDEPENDENT APPRAISERS IN BULGARIA, REGIONAL COLLEGE OF SOFIA CITY & SOFIA REGION FIRST BALKAN VALUATION CONFERENCE 19 – 21 June 2015, Sofia STARTUPS VALUATION: APPROACHES AND METHODS Rositsa Trichkova, CPA Nigokhos Kanaryan, PhD About Us Rositsa Trichkova, CPA has 25 years of experience in accounting, auditing, consulting and valuation. She is a member of the Managing Board of the Bulgarian Institute of Certified Public Accountants. Rositsa is certified appraiser of financial assets, enterprises and receivables, and real estate. Nigokhos Kanaryan, PhD has more than 10 years of experience in asset management and risk management. He is licensed investment consultant by Bulgarian Financial Supervision Commission. Nigokhos is assistant professor in the Department of Economics of New Bulgarian University. 2 Motivation 3 Growing Startup Ecosystem • Startup definition (wiki): – is a business in the form of a company, a partnership or temporary organization designed to search for a repeatable and scalable business model. – These companies, generally newly created, are in a phase of development and research for markets. – Due to this background, many consider startups to be only tech companies, but as technology is becoming a normal factor, the essence of startups has more to do with innovativeness, scalability and growth • We are in the beginning of the emergence of the startup ecosystem in Europe • Targets for growth are set & they are high • Horizon 2020 - the biggest EU research and innovation programme. €80 billion of funding
    [Show full text]
  • Methods of Valuing Investment Projects Used by Venture Capital
    PRACE NAUKOWE Uniwersytetu Ekonomicznego we Wrocławiu RESEARCH PAPERS of Wrocław University of Economics Nr 428 Wrocław Conference in Finance: Contemporary Trends and Challenges Publishing House of Wrocław University of Economics Wrocław 2016 Copy-editing: Marta Karaś Layout: Barbara Łopusiewicz Proof-reading: Barbara Cibis Typesetting: Małgorzata Czupryńska Cover design: Beata Dębska Information on submitting and reviewing papers is available on websites www.pracenaukowe.ue.wroc.pl www.wydawnictwo.ue.wroc.pl The publication is distributed under the Creative Commons Attribution 3.0 Attribution-NonCommercial-NoDerivs CC BY-NC-ND © Copyright by Wrocław University of Economics Wrocław 2016 ISSN 1899-3192 e- ISSN 2392-0041 ISBN 978-83-7695-583-4 The original version: printed Publication may be ordered in Publishing House Wydawnictwo Uniwersytetu Ekonomicznego we Wrocławiu ul. Komandorska 118/120, 53-345 Wrocław tel./fax 71 36-80-602; e-mail: [email protected] www.ksiegarnia.ue.wroc.pl Printing: TOTEM Contents Introduction ..................................................................................................... 9 Andrzej Babiarz: Methods of valuing investment projects used by Venture Capital funds, financed from public funds / Metody wyceny projektów inwestycyjnych stosowane przez fundusze Venture Capital finansowane ze środków publicznych ............................................................................. 11 Magdalena Bywalec: Updating the value of mortgage collateral in Polish banks / Aktualizacja wartości zabezpieczenia
    [Show full text]
  • Revisiting Valuation Methods of Tech Companies: a Case
    REVISITING VALUATION METHODS OF TECH COMPANIES: A CASE STUDY OF TESLA By Dilshod Davronov Submitted to Central European University Department of Economics and Business In partial fulfilment of the requirements for the degree of Master of Art in Economic Policy in Global Markets Supervisor: professor Peter Szilagyi CEU eTD Collection Budapest, Hungary 2019 Executive Summary The share price of Tesla, Inc., the world’s all-electric vehicle manufacturer, has increased by roughly 19 times in value from its IPO on June 29, 2010 (with start price of $17 per share) to December 31, 2018 ($318). The purpose of this thesis is to estimate the value of the company’s stock as of December 31, 2018, determine if the market price is fairly valued and also figure out the main drivers of such value. In this thesis we analyse fundamental concepts of valuation and its importance. In addition, the key valuation methods and, their advantages and drawbacks are also discussed. The thesis moves on with the analysis of Tesla’s business profile and historical operational and financial performance, as well as its comparison to key peer group companies. The industry outlook and the market’s expectation on the future performance of Tesla are also reviewed through industry reports by international agencies and equity research papers issued by global investment banks and equity research firms. Based on our findings from the above-mentioned analyses we forecast the future cash flow of the company and carry out its valuation using three methods, followed by the discussions regarding validity of each method’s outcome.
    [Show full text]
  • Start-Up Valuation of Biotech Companies with Real Options
    START-UP VALUATION OF BIOTECH COMPANIES WITH REAL OPTIONS A case study of the start-up Organovo Holdings, Inc. Master Thesis HEC Paris Celine Göbel [email protected] June 2016 ©2016 Celine Göbel. All rights reserved. The author hereby grants to HEC Paris permission to reproduce and to distribute publicly paper and electronic copies of this thesis document in whole or in part in any medium now known or hereafter created. Patrick Legland (Thesis Supervisor) Affiliate Professor in Finance at HEC Paris Start-up Valuation of Biotech Companies with Real Options A case study of the start-up Organovo Holdings, Inc. written by Celine Göbel Abstract: This master thesis examines several valuations methods for young companies. Start-ups are generally characterised by negative earnings, pure equity financing and binary business models. Traditional valuation methods, such as the Discounted Cash Flow, valuation multiples or comparable transactions, cannot be applied due to start ups’ high degree of uncertainty, short histories, volatile discount rates and little publicly available data on financials, comparable companies or comparable transactions. Consequently, new valuation methods, e.g. the Venture Capital method, the First Chicago method, the Damodaran approach and Real Option valuation, will be presented and directly applied to the 3D bioprinting start- up Organovo. The new valuation methods take the uncertainty of start-ups into account and allow more flexibility regarding timing and investment decisions. On top of this, the valuation of intangible assets is shortly discussed, as it is especially important for start-ups with a strong intellectual property portfolio. This master thesis also highlights non-financials factors in valuation, since the personal skills and experience of the founder and management team can have a large impact on the start-up’s value.
    [Show full text]
  • Venture Capital and Private Equity Question Bank
    B.Com (Financial Markets) Semester VI Subject: Venture Capital and Private Equity Question Bank Sr. No. Question Answer1 Answer2 Answer3 Answer4 The private equity fund generally disposes of the investment within relative time frame of 3 1 Investment Negotiation Exit Deal structuring to 5 years from investment. What is this called as? 2 What is the risk of loss due to change in market prices called? Liquidity risk Credit risk Price risk Operating risk 3 ______fund structure is ideally set up in a tax efficient jurisdiction outside India. Domestic structure Co-investment Structure Unified Structure Offshore Fund Structure In ____________ fund structure the investments are pooled from domestic investors by Co-investment 4 Unified structure Onshore Structure Offshore Fund Structure setting up a domestic pooling vehicle. Structure 5 Which of the following are typically open ended and actively managed? Private equity Venture capital Hedge fund Investment In which structure two separate pools of capital for domestic investors and for offshore Offshore Fund 6 Unified structure Onshore Structure Co-investment Structure investors are created? Structure 7 Private equity investments are _____ stage investments. early mature no particular stage none of the above Under which fund structure, an investment vehicle in the form of a limited liability 8 company or limited liability partnership organized in an offshore tax favourable jurisdiction Unified structure Co-investment Structure Domestic Structure Offshore Fund Structure makes portfolio investments into Indian companies? 9 Venture Capital investments are _____ stage investments. early mature later no particular stage 10 ______ is a form of risk capital. Hedge fund Venture capital Private Equity None of the above Unlisted Equity 11 Private equity investments are made in ? Listed Equity Shares Only debt None of the above Shares Venture capital investments are usually made at _____ stage as compared to private 12 Later Earlier Expansion None of the above equity.
    [Show full text]
  • Six Degrees of Early-Stage Ventures
    Six degrees of early-stage ventures Marc Felske Darwin College University of Cambridge April 2020 This dissertation is submitted for the degree of Doctor of Philosophy I dedicate this thesis to my loving family... Declaration This dissertation is the result of my own work, except for commonly understood ideas or where specific references are made, and includes nothing which is the outcome of work done in collaboration. It is not substantially the same as any work that I have submitted, or, is being concurrently submitted for a degree or diploma or other qualification at the University of Cambridge or other University. The dissertation consists of 63273 words, and 36 figures. Therefore, it does not exceed the prescribed word limit of 65,000 words and 150 figures for the relevant Degree Committee of the Department of Engineering. Marc Felske Cambridge April 2020 i Abstract Six degrees of early stage ventures Marc Felske Private markets investment volume and valuations exceed the level of the dot-com bubble (PwC and CBInsights, 2019). The available amount of capital surges as investors announce new multi-billion dollar funds (Kruppa, 2019). Even large, insti- tutional funds in the Silicon Valley, who are used to investing in later stages, move upstream to invest in fledgling firms to achieve higher ownership and returns (Clark, 2019a)1. Despite the high private market liquidity2, standing out from the crowd is critical and has become more difficult to achieve, even for innovative entrepreneurs (Planko et al., 2017). Curiously, venture capitalists who expect the latest technology and innovation from new ventures, did not themselves significantly innovate in their approach, including methods of evaluating ventures (Kupor, 2019).
    [Show full text]