A novel scheme to evaluate a venture business quantitatively and support decision making for incubator by combining discounted cash flow and Bass model

Although the evaluation of a value of venture business is very difficult because of its high uncertainty, incubator should evaluate the valid value of the ventures business and make a decision on allocating its resources adequately to support them effectively. A new scheme is proposed to evaluate a value and risk of venture business based on the very limited information from their business plan to support decision making quantitatively. Timing and a share of capital return at the initial public offering of the venture, licensing fee and so on can be determined by using this scheme. Future sales with business life cycle are forecasted from their business plan by applying Bass model. The validity of the scheme is verified by using the dataset of past sales of products. The present value of the venture is evaluated by discounted cash flow. The value should be reviewed by using actual sales data after the business starts. The scheme is tried to apply to a simple case study and the potential is shown to support decision making under limited information.