VENTURE CAPITAL VALUATION MODEL
Compare the ratio of
1.) Market capitalization / Total asset value (from Hoovers)
2. Price / Book Value (From yahoo)
...............Information from Hoovers.............................X................Information from Yahoo per price at close on 3/10/00
............Mkt.Cap............Total...........Total..........Mkt.Cap/......Price/.........PE............Cash/..................Price...............Name
...................................Assets..........Equity.........Equity.............Book V......................Share
AIS...........607.............323.............146..............4.5.................3.9.........26.3..............$0.37................$33.25.............Ampal Amer-Israel
ACRI.........631.............23..............17...............37.0...............37.7...........NA............$1.12.................$54.62.............Acaris Research
CMGI....33,556........5,431.........3,853..............8.7.................10.03.......111.2..........$10.46..............$136.00.............CMGI
INS..............52..............15..............10..............5.2..................4.8..........NA...............$0.16.................$10.25.............Intelligent Systems
HHGP........273..............29..............24.............11.2...............11.1.........31.0..............$0.02...................$29.62............Harris & Harris
SFE..........9,455.........1,455...........480.............19.6................17.6.........71.9............$2.02...................$271.00...........Safeguard Scientifics
.
WCAP........178............156...........133...............1.3................1.3..............1.9.............$1.05..................$33.37.............Winfield Capital
If all the portfolios here were filled with public companies, this would be like pricing Mutual Funds. The real value of Venture Capital / Investment Firms is the discovery and investment in early stage private companies that become superstars on Wall Street. A firm with a reputation for discovering early stage super stars like CMGI is given a premium valuation. The Rate of Return from the initial investment to the completion of the IPO depends on the management of the investment Firm.
AIS has superstar investments in MIRS Communications, Breeze.com, XACCT Technologies, Compal, and others. AIS has investments in 60 companies, since most of AIS investments are privately held companies the total asset value and total equity of AIS are valued at the cost of AIS's original investment.
If time were not important you could analyze the individual investments of AIS
ampal.com
and compare the value of the private companies to similar publicly traded companies.
WCAP is valued close to 1X times the book value of their investments in public companies.
WCAP has investments in 17 public companies and 15 private companies.
geocities.com (unoffical website)
If the value of WCAP?s new round of private companies is about the same as WCAP?s public companies, it seems WCAP value should double.
INS has investments in 2 public companies with value of $10 Million and 19 private companies
155.229.195.82
INS has a market capitalization of $52 Million, so the value Wall Street give the INS investment in each of the private companies is $2.2 Million per private company.
HHGP has some superstars in their investment portfolio of 11 companies
hhgp.com
Counsel Corporation CXSN is valued at a 50% discount to total equity. ( based on Hoovers and Yahoo. )
hoovers.com
CXSN currently trading at .5X times book value when CMGI is trading at 10X times book value.
CXSN has a small holding in Ci4net which looks like a potential superstar.
ci4net.com
My favorite valuation puzzle is an upcoming IPO
meVC Draper Fisher Jurvetson Fund 1 a venture capital company with no holding and no investments,
meVC will IPO itself the week of 3/27/2000. The initial offering is $5 million shares at $20 per share.
Is this a reasonable valuation? |
