The Biggest Tech Valuation Changes

The Biggest Tech Valuation Changes Usually a company's valuation is based on its assets and income. Because technology companies are so different (and typically don't have many assets or much income starting out), the valuation methods for them are considerably different as well. Lack of Fixed Assets Technology companies don't acquire land or other fixed assets as much as Projections A tech company's worth hinges on its estimated future revenues. Projections include assumptions based on demand, growth, the economy, competition, and many other variables. other companies do (and often don't have tangible products). Capital Many of technology corporations depend on equity finances, which causes the cost of capital to be close to the cost of equity. $1 %24 Management Strength As good as an idea is, it may not be sucessful without good management. A strong management team may add more value than any other factor. Intangible Assets – Most assets a technology company has are intangible – whether they're patents, copyrights, licenses, or contracts. Valuations versus Funding 16 VALUATON Microsoft's investment in Facebook is at a $15 B valuation (they later clarify that the investment was in preferred stock) 14 Facebook investor Digital Sky begins to buy back employee shares of stock 12 The New York Post suggests Digg's worth to be $250 M Digg puts itself up for sale, with a price tag of $300 M I Facebook Twitter Ning Digg LinkedIn AdMob AdMob introduces support for Android devices admob Facebook is founded with an investment of a few thousand dollars Employees at Facebook become restless about stock options Yahoo! offers to l acquire Facebook for $1 billion Ning reaches 80,000 user networks Facebook turns | down a $750 M acquisition offer 50 Facebook receives its first round of outside funding Digg receives the first of its three rounds of funding 100 Twitter begins to receive funding from non-angel sources in LinkedIn receives its largest round of funding to date 150 FUNDING 200 250 Sources: AdMob, Amper, Politziner & Mattia, LLP, CNET, Ning, TechCrunch, VentureBeat Funding in USD (Millions) Valuation in USD (Billions)