Determinants of Valuation of Early-Stage High-Growth Start-Ups

2013 ◽  
Author(s):  
Konstantin F. Prinz
Keyword(s):  
Early Stage ◽  
High Growth ◽  
Start Ups

Achieving and Sustaining New Knowledge Development in High-Expectation Start-ups

2010 ◽  
Vol 24 (1) ◽  
pp. 47-53
Author(s):  
Diego Matricano
Keyword(s):  
Competitive Advantage ◽  
Early Stage ◽  
High Growth ◽  
Knowledge Development ◽  
High Expectation ◽  
Knowledge Based ◽  
Start Up ◽  
New Knowledge ◽  
Start Ups

In markets characterized by strong competition, new knowledge and new knowledge development are generally recognized as the key means for an enterprise to gain competitive advantage. This knowledge-based competitive advantage is critical for all commercial ventures, but is especially so for high-expectation start-ups (technology-based ventures anticipating high growth rates). Even though the organizational processes of a start-up are still under development, the success of new knowledge development is affected by three critical factors – the structure of the enterprise, the organizational technology and the knowledge promoters. An analysis of these factors suggests that the role of the knowledge promoter is the key determinant of knowledge development success in the case of early-stage high-expectation start-ups.

When startups exit: comparing strategies in Europe and the USA

2018 ◽  
Vol 39 (3) ◽  
pp. 26-33 ◽  
Author(s):  
Alessia Pisoni ◽  
Alberto Onetti
Keyword(s):  
Early Stage ◽  
High Growth ◽  
High Tech ◽  
Venture Capitalists ◽  
Content Type ◽  
Early Exit ◽  
Start Up ◽  
The Usa ◽  
Local Companies ◽  
Start Ups

Purpose The purpose of this paper is to present an overview of trends toward start-up exits. Exits represent the “end phase” of the start-up process, at least for the founders and the early investors. For high-growth venture-capital-backed companies, exits are often considered the ultimate goal of building a profitable venture. These ventures are intended from the beginning to harvest the financial value created by the business at some point in the future, and return capital to early investors. Design/methodology/approach The authors tracked 5,744 merger and acquisition transactions that have occurred between European and US tech start-ups since 2012. Data are drawn from CrunchBase, the most comprehensive database of high-tech companies and investors with information on the companies and investors around the world. The authors then compared the trends of acquisitions between European and US companies. Findings Results show that US companies are far more inclined to make acquisitions than European ones. Acquirers of start-ups, both from Europe and the US, prefer to buy local companies. However, recently, US companies have started to show more interest in European start-ups. Thus, signaling that the European start-up ecosystem is growing and becoming more attractive for US buyers. Furthermore, results show that start-up exits typically happen within a few years after a company’s establishment. Research limitations/implications The research does not take into consideration the price of the transaction, or the amount of capital invested by venture capitalists in the high-tech start-ups that have been acquired. Further research should address this specific problem by helping European start-ups understand how to plan the exit phase within few years from establishment. Practical implications The results have important implications both for entrepreneurs/managers and policymakers. Early exit appears to be a global trend among start-ups. This suggests that the exit phase should be properly planned to happen in the very early stage of the start-up process. On the other hand, the research also shows that there is still a gap to be filled in the European start-up ecosystems’ ability to produce exits and create new large innovative companies (the so-called “unicorns”). Originality/value To date, there has been a little research about exits for young high-tech ventures. This paper will attempt to shed new light on this so far under-explored issue by specifically analyzing exits as financial strategy for investors and entrepreneurs.

scholarly journals Wishful Thinking versus Reality: High-growth Aspirations of Start-ups and Established Entrepreneurs in ASEAN

2020 ◽  
Vol 25 (1) ◽  
Author(s):  
Ulrike Guelich
Keyword(s):  
Empirical Study ◽  
Early Stage ◽  
High Growth ◽  
Female Entrepreneurs ◽  
Individual Level ◽  
Market Expansion ◽  
Country Level ◽  
Growth Firms ◽  
Asean Countries ◽  
Start Ups

Most enterprises in the Association of Southeast Asian Nations (ASEAN) are micro and small enterprises. Few have aspirations to “dream big.” From an economic perspective, high-growth firms provide many benefits. This empirical study explores both country-level contextual factors such as country competitiveness or innovativeness and individual-level factors associated with high-growth, such as an entrepreneur’s market expansion plans, new product perceptions, export orientation and use of latest technologies. In this context, we investigate whether to “dream big” is associated with specific strategic intentions and which influencing factors hinder or foster aspirations to grow the business by more than 20 employees within five years while developing it into an established business. Utilising random sampling of data in six ASEAN countries, collected in the years 2013 to 2015 and comparing male to female entrepreneurs, the regression results of this empirical study show that although high growth-oriented entrepreneurs in both start-ups and established enterprises account for only 2.7% of all enterprises in this study, high-growth aspirations can only partially be sustained by early-stage entrepreneurs into the next business phase since it depends on several factors: (1) receiving funding (for both genders); (2) being export oriented (for male entrepreneurs); and (3) perceptions of having new products or services to offer to the market (for women entrepreneurs). Both genders are less prone to pursue their initial early-stage growth goals as established entrepreneurs. We infer that established entrepreneurs gain more clarity on the deployment of growth through implementation in the organisation while running their businesses and therefore may be more realistic in their predictions or less confident in their pursuit of ambitious goals.

scholarly journals Private Equity & Venture Capital

2020 ◽  
Author(s):  
Keith Arundale ◽  
Colin Mason
Keyword(s):  
Venture Capital ◽  
Private Equity ◽  
Early Stage ◽  
High Growth ◽  
Government Support ◽  
Growth Trend ◽  
Public Companies ◽  
The Past ◽  
Under Performing ◽  
Start Ups

Private equity has successfully weathered economic crises in the past and appears to be well-placed to manage the current coronavirus crisis. Whilst both fundraising and investments will be significantly reduced from pre-pandemic levels for some time these are expected to recover and resume the historic overall growth trend. Private equity firms may find opportunities through taking undervalued public companies private and in restructuring under-performing businesses. However, start-ups may find seed and early stage finance hard to access. Government support measures need to meet the characteristics and needs of high growth enterprises.

scholarly journals Institutional Change and Early-Stage Start-Up Selection: Evidence from Applicants to Venture Accelerators

2020 ◽  
Author(s):  
Valentina A. Assenova
Keyword(s):  
Developing Economies ◽  
Early Stage ◽  
High Growth ◽  
New Venture ◽  
Institutional Changes ◽  
New Firms ◽  
Institutional Reforms ◽  
Start Up ◽  
Average Probability ◽  
Start Ups

Existing research at the nexus of institutional theory and entrepreneurship suggests that lowering institutional barriers to forming, growing, and exiting new firms can affect the types of start-ups that entrepreneurs found in a region. These institutional changes could influence entrepreneurs’ perceptions of the value of partnering with venture accelerators and potentially improve these sponsors’ capacity to select high-growth start-ups to fund and develop. This study evaluates these ideas by developing and testing three hypotheses. First, institutional reforms improve entrepreneurs’ perceived value of venture accelerators for resources that affect new venture development. Second, they reduce the average probability of being selected for new applicants, due to a surge in the number and heterogeneity of new applicants within accelerators’ local ecosystems. Third, institutional reforms increase the quality of selected cohorts for accelerator managers due to increases in the average quality and human capital of new applicants. To evaluate these hypotheses, I analyze data from 13,770 applicants to venture accelerators over multiple application cycles between 2016 and 2018 in 170 countries. I use a differences-in-differences design to estimate the effects of institutional changes on start-up selection after regulatory reforms that reduced the time and procedures to start new firms, obtain credit, and resolve bankruptcy for entrepreneurs. The findings have valuable implications for how governments, especially those in emerging and developing economies, can support high-growth entrepreneurship.

Antecedents of growth-oriented entrepreneurship before and during the Greek economic crisis

2017 ◽  
Vol 24 (3) ◽  
pp. 528-544 ◽  
Author(s):  
Ioannis Giotopoulos ◽  
Alexandra Kontolaimou ◽  
Aggelos Tsakanikas
Keyword(s):  
Work Experience ◽  
Early Stage ◽  
New Ventures ◽  
High Growth ◽  
Content Type ◽  
Crisis Period ◽  
Individual Level ◽  
Level Data ◽  
The Social ◽  
Before And After

Purpose The purpose of this paper is to explore potential drivers of high-growth intentions of early-stage entrepreneurs in Greece before and after the onset of the financial crisis of 2008. Design/methodology/approach To this end, the authors use individual-level data retrieved from Global Entrepreneurship Monitor annual surveys (2003-2015). Findings The results show that high-growth intentions of Greek entrepreneurs are driven by different factors in the crisis compared to the non-crisis period. Male entrepreneurs and entrepreneurs with significant work experience seem to be more likely to be engaged in growth-oriented new ventures during the crisis period. The same appears to hold for entrepreneurs who are motivated by an opportunity and also perceive future business opportunities in adverse economic conditions. On the other hand, the educational level and the social contacts of founders with other entrepreneurs are found to drive ambitious Greek entrepreneurship in the years before the crisis, while they were insignificant after the crisis outbreak. Originality/value Based on the concept of ambitious entrepreneurship, this study contributes to the literature by investigating the determinants of entrepreneurial high-growth expectations in the Greek context emphasizing the crisis period in comparison to the pre-crisis years.

EAST ASIAN FINANCIAL SYSTEMS AND THE TRANSITION FROM INVESTMENT-DRIVEN TO INNOVATION-DRIVEN ECONOMIC DEVELOPMENT

2000 ◽  
Vol 04 (03) ◽  
pp. 253-276 ◽  
Author(s):  
MICHAEL CARNEY ◽  
ERIC GEDAJLOVIC
Keyword(s):  
Information Technology ◽  
East Asian ◽  
Value Added ◽  
High Growth ◽  
High Technology ◽  
Financial Systems ◽  
Economic Sectors ◽  
Financial Infrastructure ◽  
Technology Initiatives ◽  
Start Ups

Many of today's high growth and high value-added businesses are concentrated in the knowledge- and innovation-based industries of information technology, telecommunications, biotechnology, media, software and entertainment. Though the governments of Hong Kong, Singapore & Taiwan (Asian NIEs) have invested heavily in promoting these sectors, they have largely failed to produce internationally competitive firms. We argue that government-led initiatives that were appropriate for economies in the investment-driven stage of industrialisation need to be reformed. As some economic sectors approach the technology frontier, diverse financing arrangements are needed to direct capital to high technology start-ups. To complement existing government-related technology initiatives, a more varied financial infrastructure must be developed.

Three Views of a Train Wreck

2016 ◽  
Author(s):  
Michael Kinch
Keyword(s):  
Public Health ◽  
Research And Development ◽  
Venture Capital ◽  
Food Chain ◽  
Early Stage ◽  
Health Benefits ◽  
Federal Spending ◽  
Moore’S Law ◽  
Government Grants ◽  
Start Ups

Despite and arguably because of the enormous public health benefits arising from the introduction of new medicines, the industry is in the midst of crisis. We detail in this chapter the decline in research and development efficiency, which has been termed “Eroom's Law,” a playful inversion of the bettern known Moore's Law of Computing. An explanation of declining efficiency follows as is a brief summary of some remedies taken by many biopharmaceutical entities, including the abandonment of therapeutics targeting particularly difficult indications such as Alzheimer's disease and antibiotics. We also convey how the industry has developed into a sort of food chain, with smaller companies and government grants supporting the earliest stages of research, which are then acquired by medium-sized companies, which in turn are consolidated into large companies. This food chain is fundamentally in doubt based on shrinking Federal spending on research combined with a decline in venture capital support for early-stage start-ups.

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