Abstract:
Nowadays, providing the necessary capital for startups is one of the major challenges for entrepreneurs. Also, due to the risks of venture capital, financial institutions and banks often show less inclination to invest in this type of project. However, with the emergence of social networks, capital procurement through crowdfunding has gained attention as one of the new methods to attract retail investors for financing high-risk projects. The aim of this research is to estimate the capital required to launch startups and subsequently value these new businesses. This article introduces valuation methods for startups that seek financing through crowdfunding. In this research, considering the nature of startups, two methods—Discounted Cash Flow (DCF) from an income-oriented approach and Black-Scholes from a real options approach—have been identified as suitable for financing through crowdfunding. Audited financial statements of listed companies with similar banking service activities were obtained for the years 2013 to 2016. By comparing the results of these approaches, the validity of the obtained value can be verified. The closeness of the results from the two methods indicates an appropriate estimation of the value of the studied project.
Machine summary:
In this research, considering the nature of startups, two methods—Discounted Cash Flow (DCF) from an income-based approach and Black-Scholes from a real options approach—have been identified as suitable for financing through the crowdfunding method.
Keywords: Startup project valuation, crowdfunding, discounted cash flow model, real options, Black-Scholes Subject Classification: G13 1.
This method is a business valuation approach used by venture capitalists and private equity investors8 for startup companies that are in the early stages9 of their life cycle (Hashemi, 201510).
Summary of literature review of valuation methods for startups Method Definition Advantages Disadvantages Scope of Application Discounted Cash Flow Method Valuation based on the present value of expected future cash flows Most widely used method - more accurate - reliable compared to other methods Valuation based on expected income - subjective - long-term - error probability due to estimation Arbitrage Method Valuation based on market transaction values Provides very logical and comparable values if market information is available Shortage or unavailability of tangible assets Chicago Method Weighted average of company value Easy and low-cost calculation Ignoring future income in the initial stages of technology development, technology transfer in organizations Berkus Method This method maximizes the value by considering the monetary reward for each risk in order to achieve the ultimate entrepreneurial goal.
In this research, according to Table 3, the discounted cash flow method and the real option approach were selected for the valuation of the project under consideration.
(
, 
, 
)
