Research The Value Assessment Of Venture Business In Venture Capital

In the contemporary world, the role of innovation in promoting global economic development has been given more and more attentions and emphases. Venture businesses that are conducting technology innovation need to invest a lot of money and face enormous risks at the same time. Enterprises are facing a number of difficulties in the process of technology innovation. There are a lot of risks in the process of technology innovation, and thus, the traditional credit approach is not sufficient to meet enterprises'capital demands in the innovation process. To resolve the problem of inadequate funding, innovated financing models are needed; that is why venture capitals come into being. However, given the existence of high risk, venture capitalists need to carefully assess the business value before making investments. Value assessment of the venture business is the foremost issue; even after the initial injection of venture capitals, venture capitalists will continue assessing the venture project as well as the venture business. The process of venture capital investment is that of continuing value assessment of the venture business, and the decision-making of venture investment enterprises is based on the assessment to the venture business.In this paper, we review the global research on theories and methods of value assessment of venture business in risk investment processes, and then propose the usage of financial instrument options to evaluate the value of the venture business. Through an analysis of the structures of venture business values, we identify three basic types of values, namely, net asset values, asset premiums, and option values. On the basis of the previous research the thesis adapts the traditional the option value assessment method (i.e., the real option assessment method), proposes a new pricing method of the Europe Option that follows the jump and diffusion process, and analyzes the impact of the various factors.