Valuing an Entrepreneurial Enterprise

Entrepreneurs generally lack the marketing capabilities necessary to bring their new product to market. To engage the resources required to do this, they must somehow place a value on the enterprise. However, all of the methods of valuation currently available are based on the use of historical or current revenues, and therefore are not applicable to an entrepreneurial enterprise with a first-time product. InValuing an Entrepreneurial Enterprise, Audretsch and Link present a valuation method uniquely tailored to emerging technology-based ventures that have no revenue history to lean on. Unlike many traditional methods, theirs does not take into account the track record of companies and products similar to that being valuated. Instead, it draws on economic theory to formulate a solution to the problem. The book develops conceptual ground, including trends in entrepreneurship, models of innovation, and the economics of standards and entrepreneurship policy. The authors review the traditional valuation methods and illustrate them numerically with case studies to show how the traditional approach produces an incorrect valuation. The core of the book presents the new methodology and demonstrates how it avoids the pitfalls of past approaches. The authors also show how public policy on technology and infrastructure changes valuations of start-up firms in areas such as stem-cell products and renewable fuels projects. Valuing an Entrepreneurial Enterprisewill serve as a valuable resource for advanced students, economists, financial planners, and valuators interested in new valuation methods and the theory behind them, as well as those interested in entrepreneurship.

David B. Audretsch is Distinguished Professor, Ameritech Chair of Economic Development, and Director of the Institute for Development Strategies at Indiana University. He is an Honorary Professor at the WHU-Otto Beisheim School of Management in Germany. In addition, he serves as a Visiting Professor at King Saud University in Saudi Arabia and as a Research Professor at Durham University, an External Director of Research at the Kiel Institute for the World Economy, Honorary Professor at the Friedrich Schiller University of Jena in Germany. Audretsch's research has focused on the links among entrepreneurship, government policy, innovation, economic development, and global competitiveness. His research has been published in over one hundred scholarly articles in leading academic journals. His books include The Entrepreneurial Society (OUP, 2007) and Entrepreneurship and Economic Growth (OUP, 2006).

Albert N. Link is Professor of Economics at the University of North Carolina at Greensboro. He is the Editor-in-Chief of the Journal of Technology Transfer. Professor Link's most recent books include Public Goods, Public Gains (OUP, 2010), Government as Entrepreneur (OUP, 2009), and Entrepreneurship, Innovation, and Technological Change (OUP, 2007). Currently, he is serving as the vice-chairperson of the Innovation and Competitiveness Policies Committee of the United Nation's Economic Commission for Europe (UNECE).