The start-up's roadmap to private equity financing: substituting discounts with a premium in valuation for growth
Authors: Rizomyliotis, Ioannis 
Kvasova, Olga 
Salvi, Antonio 
Giakoumelou, Anastasia 
Issue Date: 26-May-2023
Journal: International Journal of Entrepreneurial Behaviour and Research 
Keywords: Business development, Financing, Innovation, Start-ups
Abstract: 
Purpose: Access to financing is a key success factor for start-ups. High failure rates, long payback periodse and asymmetries lead to conservative pricing and valuation discounts. The authors examine financial marketing and contingent factors, as enablers of a “patent premium” by private equity (PE) investors targeting start-ups in their growth and expansion stages.
Design/methodology/approach: Drawing from the contingency, innovation and signaling theories, the authors collect patent records for Italian start-ups in which a higher than 30% stake was acquired by PE investors during the period 2014–2020. The authors apply a generalized linear model with a logit link and robust clustered error to test the key relationships and control for endogeneity with a Heckman two-stage selection model.
Findings: Findings indicate start-ups’ access to financing is significantly impacted by marketing constructs adopted in the operation. Innovation alone does not suffice to determine a valuation premium, unless contingent on the promotion of its product, the placement -investors targeted-of the equity, brand equity levers of previous ownership and marketing competence backing the deal.
Originality/value: The authors provide new insights in the marketing-finance interface, highlighting levers that reassure investors and enable monetizing innovation in start-ups that are still privately held. The authors bridge a gap in literature that has mainly focused on venture capital and innovation financing in the open market, as well as a significant gap regarding the marketing design of private equity placements.
ISSN: 1355-2554
DOI: 10.1108/IJEBR-02-2022-0197
URI: https://uniwacris.uniwa.gr/handle/3000/1621
Type: Article
Department: Department of Business Administration 
School: School of Administrative, Economics and Social Sciences 
Affiliation: University of West Attica (UNIWA) 
Appears in Collections:Articles / Άρθρα

CORE Recommender
Show full item record

SCOPUSTM   
Citations

1
checked on Nov 1, 2024

Page view(s)

21
checked on Nov 5, 2024

Google ScholarTM

Check

Altmetric

Altmetric


Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.