Assessing the Economic Value of Venture Capital Contracts - An Option Pricing Approach

Jil C. Onimus makes a contribution to the nascent research line on the economic value of venture capital contracts which lies at the intersection of venture capital contract design and real option pricing. She identifies the baskets of real options embedded in model venture capital contracts as published by the National Venture Capital Association (NVCA) and shows how they can be priced in interaction using Least Squares Monte Carlo simulation. The pricing model is calibrated by means of a dataset of deal terms in Silicon Valley as well as industry statistics from the NVCA. By applying the model to standard investment scenarios (multiple financing rounds with multiple investors), the author obtains estimates of option values for individual terms and for full contracts with interaction effects.

List of contents

Aus dem Inhalt:
Pricing Methodology; Venture Capital Contract Pricing Model; Application of the Pricing Model

About the author

Dr. Jil Caroline Onimus earned her doctoral degree from the European Business School, Endowed Chair for Corporate Finance and Capital Markets. She works as an advisor to consumer internet companies on strategy, fundraising and corporate development.

Summary

Jil C. Onimus makes a contribution to the nascent research line on the economic value of venture capital contracts which lies at the intersection of venture capital contract design and real option pricing. She identifies the baskets of real options embedded in model venture capital contracts as published by the National Venture Capital Association (NVCA) and shows how they can be priced in interaction using Least Squares Monte Carlo simulation. The pricing model is calibrated by means of a dataset of deal terms in Silicon Valley as well as industry statistics from the NVCA. By applying the model to standard investment scenarios (multiple financing rounds with multiple investors), the author obtains estimates of option values for individual terms and for full contracts with interaction effects.

Product details

• Authors: Jil Onimus, Jil C. Onimus, Jil Caroline Onimus
• Publisher: Gabler
• Languages: English
• Product format: Paperback / Softback
• Released: 31.07.2011
• EAN: 9783834928122
• ISBN: 978-3-8349-2812-2
• No. of pages: 153
• Weight: 334 g
• Illustrations: XV, 153 p. 6 illus.
• Series: ebs-Forschung, Schriftenreihe der EUROPEAN BUSINESS SCHOOL Schloß Reichartshausen; ebs Forschung, Schriftenreihe der European Business School Schloss Reichartshausen; Research; Research; ebs Forschung, Schriftenreihe der European Business School Schloss Reichartshausen; ebs-Forschung, Schriftenreihe der EUROPEAN BUSINESS SCHOOL Schloß Reichartshausen
• Subjects: Social sciences, law, business > Business > Economics; Finanzwirtschaft, Beteiligung (wirtschaftlich), Finance, Economics and Finance, Financial Economics, Shareholder Agreements