A robust valuation model for entrepreneurial ventures

Research output: Contribution to journalArticlepeer-review


Pro forma estimation of financial statements often builds on constant ratios to sales revenue. While
constant ratios may be relevant for established firms operating in predictable industries, they yield
non-informative and possibly misleading information when applied to new firms, and particularly to
technology ventures. Because new firms grow and change rapidly, a robust analysis should be based
on intimate familiarity with the specific firm’s business plan. This paper presents an alternative
approach that links the firm’s budget, as derived from its business plan, to pro forma financial
statements, and to valuation models. The resulting estimated firm value is less sensitive to exogenous
parameter assumptions than other methodologies.
Original languageEnglish GB
Pages (from-to)57-74
Number of pages18
JournalThe Journal of Entrepreneurial Finance
Issue number2
StatePublished - 2013


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