On the structure of discount rate in the venture company valuation

This paper presents a methodology for composing a venture discount rate, that takes into account, in addition to the traditional business risks, the specific risks of SIC (small innovative companies), the concrete characteristics of the intellectual property object underlying the venture business, and specific licensee’s risks in the event of conferring a bundle of exclusive rights under licensing contract. In the frame of cumulative method, all the analyzed risks are structured into groups. The developed methodology of composing a venture discount rate is illustrated in the Mini Case-Study - by example of a particular SIC dealing in production of concrete that has improved performance compared with the analogues available in the market.