In:
International Journal of Advances in Management and Economics, Kiban Research Publications, Vol. 9, No. 2 ( 2020-02-28), p. 01-15
Abstract:
This article analyzes the decline of one of the best well-known and promising European start-ups: Mosaic on L. t. d. The business case is emblematic of many bankruptcies caused by strategies focusing on the expectations of continuous growth of economic capital and based on unconventional performance indicators, without considering the economic-financial results and self-financing. The expectations of return on capital are extremely high and this forces one to undertake risky growth paths with very high expected return rates. This also happens in the absence of an advanced and effective capital market. Venture capitalists, even when they are public, cannot compensate for these excesses. The analysis of the case contributes to the debate on the complex topic of assessing the potentiality of start-ups and it provides useful suggestions to operators (venture capitalists, business angels, start uppers, investors, etc.) for greater prudence in considering the non-financial performance indicators. Start-ups do not produce economic results in the early stage, so they may also be valued by using non-financial metrics. However, unconventional indicators cannot be the only parameters for evaluating. When the firm is a start-up without meaningful financial information, it is more appropriate to refer to a reliable business plan drawn up on rigorous estimates of expected incomes and cash flows. Keywords: Venture capital, Start-up, Default, Performance indicators, Business case.
Type of Medium:
Online Resource
ISSN:
2278-3369
Uniform Title:
Venture Capital and Valuation of Innovative Start-ups: the Business Case of Mosaicoon
DOI:
10.31270/IJAME/v09/i02/2020
DOI:
10.31270/IJAME/v09/i02/2020/1
Language:
Unknown
Publisher:
Kiban Research Publications
Publication Date:
2020
detail.hit.zdb_id:
2678949-8
SSG:
3,2