The valuation of cash-flowless high-risk ventures

Avi Messica

Research output: Contribution to journalArticlepeer-review

4 Scopus citations


The valuation of cash-flowless high-risk, especially venture capital, investments is more of an art than a science. In the absence of cash flow forecast and in view of the high uncertainty about the success of the commercialization effort, it is not possible to apply the Discounted-Cash-Flow (DCF) method that is the traditional method for the valuation of conventional projects or ventures. In the absence of a structured and methodical way for valuating such projects, CEOs, CFOs, investment managers as well as venture capital and other investors resort to variety of methods including gut feeling. In this article I present a novel venture-pricing model (VPM) and method for the valuation of cash-flowless risky projects as part of an ongoing effort to set the ground for a quantitative venture capital finance theory that is complementary to the traditional corporate finance. The model may serve both researchers and practitioners (investors, entrepreneurs, C-level executives and the like) for the valuation of high-risk high-gain ventures - such as venture capital investments - and as supporting tool for decision-making and portfolio management.

Original languageEnglish
Pages (from-to)43-48
Number of pages6
JournalJournal of Private Equity
Issue number2
StatePublished - 1 Jan 2008
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


Dive into the research topics of 'The valuation of cash-flowless high-risk ventures'. Together they form a unique fingerprint.

Cite this