How to Value Start-ups and their Technologies from Cyber to Healthcare

For entrepreneurs and investors/advisors, this Think Tank will serve as a practical discussion in constructing and understanding valuations of start-ups in rapidly shifting industries, including drug development, medical devices, cybersecurity, and renewable energy. For large companies, valuation is based on forecasts of free cash flow; in technologically-driven industries, product pipelines can represent a large part of market capitalization. The situation is even more critical for small companies committed to a single idea—all of their value is linked to one project. Any business transaction or internal proposal to begin or terminate an R&D project in which innovative projects are valued or exchanged requires a realistic valuation of those projects. Moreover, different projects have different dynamics. Pharmaceuticals have large lead times and are dependent on patents and out-licensing agreements. In contrast, software develops quickly, and IP is hard to value. This will be a guide to building appropriate valuations for companies competing in rapidly shifting industries and offering products under new business models where little precedent exists, taking both financial and behavioral issues into consideration.