Research Of The Methods Of Venture Firm Evaluation On The Basis Of Real Options

With the fast development of science and technology,the world economyis coming into the knowledge economy period.The contribution made by highand new tech enterprises is becoming larger day by day.The high and newtech industry,which is characterized by electronic information technology andbiology engineering technology, etc,is now gradually becoming the competitionfocus of the world economy. Along with this, VC is also gradually becoming theindispensable indubator of these industries.It is proved to be more and moreimportant driving force of economy of countries.The uncertainties and risksbrought by the fast development of high technology reveal to ventue firmsdaily,but at the mean time,the value of the operation and managementflexibility is of more and more importance.Traditional decision making methodsare turn out to be uneffective in the evaluation of these firms becauce of itsflexibility,and thus some of those promising venture firms come to close downfor the unreasonable appraisement. So,how to reasonablly appraise thevalue of Venture firms is becoming hot and difficult point in the area of VC.This paper started from the definition of VC.At first,the definition of VC andthe characteristics of the Venture firms were briefly introduced, then,theircharacteristics of appraisement and the constitution of value wereanalysed.This paper also compared the merits and faults between the realoption methods and the traditional methods,and pointed out where thesuperiority of the former existed. Considering the featues of stagelyinvestment,this paper put forward a point of taking the firm as a whole and thusappraising it as a value of compound option.According to its uncontinuity,webring out a jump-diffusion model to measue the change of the value of itsproperties.This model will be more appropriate to measure thechanges.Because of the difficulties of solving those stochastic differentialequation which is better fitted to the reality,we adopted monte carlo simulationmethod to solve it.At last,we use the historical data of dangdang’s three-stagefinancing to measure the value of the compound option implicated in it,and theresults turn out to be approve that the method mentioned in this paper can reasonablly appraise the value of Venture firms and thus lead to right decisionmaking.The point of innovation of this paper lie in that this paper putt forward ajump-deffusion model, consider the Venture firms which reiceved stagedinvestment as a whole and then appraise them from the point of view ofcompound option.This is more coincident with the features of the Venturefirms.The other lies in that considering the difficulties in solving stochasticdifferential equation,the monte carlo simulation method on the basis ofR-language has been used to the settlement,which simplifies the progress ofthe application of the model.