For the individual and institutional investors, the real value of a firm is always a concern. Especially, if it is a high-tech start-up, the more importance is focused on it. The present thesis is a study on a new approach in measuring a value of IT start-ups through their growth stages.
This thesis will contribute three aspects to the measuring the value of pre-IPO start-ups. The first, this study is focusing the value differences from the beginning of the IT start-ups to the IPO stage, even though it is very difficult to measure the value of pre-IPO companies.
The second, this thesis classifies the value of the firm (Market Capitalization) into two parts. One is technology value which has a lot of uncertainties and the other is book value which can be inferred by the financial statements. So, it has first obtained the firm’s market capitalization of its each grow stages and book value of total equity by capital surplus, and it calculates the technology value later by them. It also specifies each component ratio by the empirical study of KOSDAQ listed 30 IT companies.
Finally, this study tried to correct the over-valuation occurred by IT venture-boom of 1999 through 2000. During those times, almost every IT start-ups funded by the venture-capitalist is over-valued, not because of its potential technology growth, but because of its fashion of the market called ‘Market-Created-Value’. Thesis tried to revise the value as a companies’ real value by multiplying the Market-Created-Value multiplier.
Now is the time to make a quick decision not to lose the investment opportunities and with a right information. By the thesis, it is expected that many kinds of investors are willing to use the ratio between the two main components in terms of the needs of quick decision and fast investment and they can recognized the technology value intuitively by referring the average of case in this study.
