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Valuing early-stage companies an art rather than a science
Valuing early-stage companies an art rather than a science - NZVIF
By Peter Kerr for sticK
(sticK - 23 June 2011 ) 'Too soon to tell' is one of the main conclusions of a NZ Venture Investment Fund research report about the valuation of early-stage kiwi investments.
The report by NZVIF's Chris Twiss and Carl Jones says the NZ market in too fledgling a stage, with too few exits to really be able to read the tea leaves with regard to what the early-stage valuations should or could be to be fair to both the company entrepreneurs and investors.
There has only been 16 exits in the 10 years worth of venture capital and angel investor punts on promising businesses, with eight of these exits through trade or private sales, five through liquidation and three as write offs.
This is from a data set of 186 companies invested in between 2004 and Dec. 2010, in which approximately $900 million of such formal investment has been made. The authors note that there is no separate data for the universally recognised group known as the 3 F's - friends, family and fools - but that they are likely to have at least matched the $475m invested by angels.
It is too difficult to draw conclusions the report says.
For sticK – science, technology, innovation & commercialisation KNOWLEDGE - is a new Wellington based news service concentrating on following the money from ideas to income. Contact editor Peter Kerr at peter.kerr055 @ gmail.com
Peter Kerr
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