Abstract:

We propose a novel method for determining an appropriate discount rate for the valuation of hightechnology ventures in the early stages of venture capital investments. In contrast to conventional methods being based on complex theoretical models and mainly unrealistic assumptions, our method offers the VC practitioner a well manageable tool. In detail, it can process the only type of information that is available at this stage of the company’s life without presupposition: linguistic expert knowledge. This knowledge is captured and depicted in a specific tool named Fuzzy Cognitive Maps (FCM).To eventually obtain a crisp value out of this captured knowledge, we transform FCMs into Fuzzy Inference Systems (FIS). To attain this goal we have developed a clear and unambiguous methodical framework. First practical applications were carried out valuing a specific biotechnology venture. The obtained results are promising, though further research efforts became obvious.