Finance: New Venture Valuation by Venture Capitalists

INTRODUCTIONThis paper aims at introducing and describing think capital, stages of VC, importance in frugal growth and lastly valuation of new calling ventures. thither are approximately(prenominal) fiscal methodologies available for valuing new business based on its outputs such as cash flows, financial statements etc. This paper introduces a complementary method to breathing financial methods to valuate new venture. This is based on a research study paper ? new-fashioned Venture rating by Venture Capitalists: An Integrative Approach? published by Dingkun Ge (Asst. Prof. San Francisco University), James M. Mahoney (Economist, Federal Reserve Bank of New York) and Joseph T. Mahoney(Prof. of Strategic management, University of Illinois at Urbana). The research study develops a theoretical framework to explain the relationship between venture capitalists? valuation of new venture and factors identified in the strategy books as important in predicting a firm?s economic performance.

VENTURE CAPITALKeeping a business going takes cash and emergence it can take even more. Capital is the life sentence blood of a growing business. There are several different ways to raise capital to fund the growing business. The success of these strategies depends on the stage of growth of the business and the veritable trend of the industry in which the business operates. Raising pay for a business is often a complex process.



cash in hand can be raised by using in the flesh(predicate) savings, boot strapping, bank loans or through Private equity.

Venture capital is a type of unavowed equity, which is a call that encompasses a broad range of equity investments in private businesses. Private equity firms are frequently categorized into collar types ? venture capital, mezzanine (also called expansion), and buy-out (also called leveraged buy-out) ? classified according to factors such as industry expertise, investment levels, deal structures, and desired return1. There is some overlap amongst the three types of private equity firms...

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