Dmytro Shestakov
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The method presented here for evaluating and managing startup risks is geared towards the uncertain world of innovative startups and enables entrepreneurs and investors to navigate it more confidently. The book introduces an agile non-cash-flow-based methodology for startup valuation, offering practitioners a holistic risk and innovativeness assessment tool enabling quantification of a startup’s potential for exponential growth throughout its lifecycle.
This paper suggests new perspective to evaluating innovation projects and understanding the nature of startup risks. It considers five principal hypotheses that underlie every innovative project that comprise a bunch of respective assumptions to manage start up risks in a proactive manner. Suggested approach spots the light on a project’s uncertainties and risks, embedded investment and managerial options, and enables more comprehensive and accurate evaluation of innovative startups.
The paper focuses on the essential need for a thorough comprehension of terminology and taxonomy within the context of creating, executing and applying innovation. This understanding is crucial for their effective risk management and successful entry into markets, as well as for fostering the sustainable development of the national economy through innovation management, entrepreneurship, and venture investing.
The research aims to clarify ambiguities between the taxonomy of innovation degrees by conducting a thorough literature review on innovation types. It meticulously examines and debates various scholarly conclusions, addressing the challenges in categorizing innovations based on their degree. This confusion in the academic world has profound implications, affecting both the conceptual grasp of innovation and the methods used to assess its levels.
It delves into an in-depth analysis of the real options method, examining its effectiveness in evaluating investment projects characterized by high levels of uncertainty. It draws a comparison between this method and the traditional approaches to project valuation, highlighting the evolving necessity for more advanced methods in appraising startups and innovative projects.
The paper delves into the vital research of scientific approaches for a theoretical exploration of core terminology in the innovation domain. Through an extensive review and systematization of relevant literature, the study addresses the prevailing inconsistencies and disagreements in the foundational concepts of innovation. The research methodically dissects and evaluates various scientific viewpoints on the innovation process and its outcomes, leading to the realization that there’s a significant disparity in basic concepts within the innovation field.
The research delves into the evolving landscape of modern competition, highlighting the critical importance of strategic flexibility in today’s rapidly changing business environment. It examines how the competitive arena has undergone significant shifts, necessitating adaptability and agility in corporate strategies. A key focus of the article is the exploration of various theoretical perspectives on the concepts of "flexibility," "strategy," and "strategic flexibility." It sheds light on the different forms and levels of flexibility within organizations, emphasizing how these facets have been integral in the literature concerning organizational change and strategy.
The paper presents a thorough investigation and evaluation of a startup project's strategic flexibility, focusing on its array of development options through the lens of the real options approach. This innovative approach melds concepts from corporate finance, real options, and game theory, culminating in the application of the Risk-Neutral Probability measure and the valuation techniques derived from the Black-Scholes-Merton model. The crux of this research lies in its ability to quantify the value of managerial decisions and the extent of a project's flexibility.
The research delves into the critical role of financial instruments in the management of innovation-focused investment projects. Central to the study is the enhancement of methodological approaches for assessing the investment appeal of projects, especially those with varying degrees of innovation. The paper introduces a strategic mechanism for making investment decisions in promising innovation-driven projects, taking into account the complexities and risks associated with managing investment resources. This includes refined methods for project evaluation, aimed at minimizing the variability in expected returns and effectively modeling investment flows.
The research rigorously explores and evaluates the concept of expanded Net Present Value (NPV), moving beyond the traditional framework of simple or passive NPV, in the context of various financing options for projects. Utilizing the real options approach, which integrates the principles of corporate finance, real options, and game theory, the study culminates in applying the Risk-Neutral Probability measure and the valuation of a Call Option as per the Black-Scholes-Merton model. The paper aids managers in navigating the complex landscape of strategic financing, offering insights into the optimal selection and combination of available financial options.
The paper centers on the exploration and appraisal of a company's expanded Net Present Value (NPV) in relation to its available financing options, utilizing an advanced real options approach. It represents a synthesis of the latest developments in corporate finance, real options, and game theory. The primary objective of this study is to estimate the value of managerial decisions, making it an apt tool for valuing corporate strategy and its inherent flexibility. By integrating modern theories from different finance domains, the approach offers a more nuanced and comprehensive perspective on financial decision-making.
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