Assessment Study, The Value Of High-tech Start-ups Based On Option Theory

Value evaluation is key point of the venture capital (VC). But because of the high uncertainty of the new venture enterprise, which has no past, no reference of the markets or techniques, the conventional way. such as DCF-NPV approach of which fundamental hypothesis differ from the real environment greatly , has not been able to manage it. How to estimate this high uncertainty value is an urgent problem right now.Using the real options approach to evaluate the value gives us a new way to estimate, discover and promote the value of an enterprise. The issue concludes an idea after analysis the features of venture company that the hypothesis of options theory is much closes to the real environment of investment, and its way of pricing is more suitable to evaluating the value of uncertainty of venture company. The value of the high-tech lies in an opportunity to gain a high profit or a great lost. That is to say it's a value of opportunity, which is considered a call options in options theory. The utility of real options approach makes us to evaluate the real value more accurately, especially for the project which has no converse, or a big and unfixed high-tech program. The issue makes it clear that the potential use of real options approach in venture company by several practice examples. Also we can learn the value of the venture company more completely by this issue.