The Relevance of Financial versus Non-Financial Information for the Valuation of Venture Capital-Backed Firms

Sievers, Soenke; Mokwa, Christopher Frederik; Keienburg, Georg

doi:10.2139/ssrn.1449740

Cited by 12 publications

(7 citation statements)

References 81 publications

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“…Accordingly, it seems important for project initiators to be transparent and persuasive about the funding goal. We support Achleitner, Engel, Reiner's (2013) and Sievers, Mokwa and Keienburg's (2013) conclusion that crowdfunding and traditional venture capital both require detailed, internally consistent and market-referencing business plans to achieve legitimacy, though high funding targets decrease organisational legitimacy without a convincing justification of source and use of funds.…”

Section: Funding Target and Final Fundingsupporting

confidence: 64%

Exploring entrepreneurial legitimacy in reward-based crowdfunding

et al. 2014

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Venture financing through social networks has become a global phenomenon. The processes and drivers of crowdfunding require careful study to identify similarities and distinctions from traditional venture finance. The demonstration of project legitimacy is especially interesting because online crowdfunding limits investors' access to the entrepreneur and organisation. How do rewards-based crowdfunding projects establish and demonstrate legitimacy in this virtual, impersonal context? We employ a novel data-set collected from the Kickstarter crowdfunding platform to explore the characteristics of successful projects, including legitimating signals and content. The data reveal numerous findings linking project characteristics to legitimacy and success. First, lower funding targets and shorter duration signal legitimacy by setting modest, achievable expectations. Rewards structures, such as traditional equity investment terms, appear to generate a sense of legitimate investment returns. Finally, narrative legitimacy in the online crowdfunding context may derive more from the online platform community than the visual pitch. Our study reveals a more nuanced picture of legitimacy formation during rewards-based crowdfunding, with implications for theories of resource assembly and the practice of venture finance.

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Section: Funding Target and Final Fundingsupporting

confidence: 64%

Exploring entrepreneurial legitimacy in reward-based crowdfunding

et al. 2014

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“…2 The method of constructing case materials from financial data of a real company has been applied in previous studies (e.g., Sedor, 2002). Choosing a company from the software industry is justified by the high relevance of nonfinancial information for valuation in this industry (Sievers, Mokwa and Keienburg, 2013).…”

Section: Figurementioning

confidence: 99%

The Effect of CEO Extraversion on Analyst Forecasts: Stereotypes and Similarity Bias

Becker

Medjedovic

Merkle

2019

The Financial Review

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In an experiment with professional analysts, we study their reliance on CEO personality information when producing financial forecasts. Drawing on social cognition research, we suggest analysts apply a stereotyping heuristic, believing that extraverted CEOs are more successful. The between‐subjects results with CEO extraversion as treatment variable confirm that analysts issue more favorable forecasts (earnings per share, long‐term earnings growth, and target price) for firms led by extraverted CEOs. Increased forecast uncertainty leads to even stronger stereotyping. Additionally, personality similarity between analysts and CEOs has a large effect on financial forecasts. Analysts issue more positive forecasts for CEOs similar to themselves.

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“…The average firm has $0.26 of sales per dollar of requested valuation. The price-to-sales ratio of approximately 4 is lower than Sievers, Mokwa, and Keienburg (2013), who report multiples as high as 13. Presumably, this lower valuation reflects the mix of high growth and established businesses that appear on the show.…”

Section: Data Collection and Summary Statisticsmentioning

confidence: 72%

Angels or Sharks? The Role of Personal Characteristics in Angel Investment Decisions

Boulton¹,

Shohfi

Zhu

2018

Journal of Small Business Management

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We use actual negotiations between angel investors and entrepreneurs to study the impact of personal characteristics on investment outcomes. We construct a unique data set with 707 investment requests led by 1,089 entrepreneurs and find that the personal characteristics of the entrepreneur, including gender, race, and age, are correlated with requested valuations, the likelihood that an offer is received, and the implied valuation when an angel investor extends an offer. Shared personal characteristics between entrepreneurs and investors also affect the likelihood that an investor makes an offer, the entrepreneur accepts an offer, and the implied valuation when an offer is extended.

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The Relevance of Financial versus Non-Financial Information for the Valuation of Venture Capital-Backed Firms

Cited by 12 publications

References 81 publications

Exploring entrepreneurial legitimacy in reward-based crowdfunding

Exploring entrepreneurial legitimacy in reward-based crowdfunding

The Effect of CEO Extraversion on Analyst Forecasts: Stereotypes and Similarity Bias

Angels or Sharks? The Role of Personal Characteristics in Angel Investment Decisions

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