Within the last years, start-ups have achieved extraordinary high valuation levels which have never been seen in such dimensions before. These high-valued start-ups with valuations above or equal to US$1bn are also called unicorns. Similarly, media coverage of start-ups has increased significantly. In this paper the impact of media coverage on global unicorn valuations between 1990 and October 2015 is empirically analyzed.
In addition, the impact of technology advancements on the media and start-ups is discussed. The here presented results indicate that technology advancements increase media coverage for start-ups. Investors which are typically not primarily active in the VC market are most affected by increasing media coverage. Start-up and especially unicorn valuations are driven to a large extent by increasing media coverage before a funding round. These results add new insights on the driving factors of start-up valuations and are consistent across a variety of different regression models and robustness checks.
Inhaltsverzeichnis (Table of Contents)
- 1. Introduction
- 2. Literature Review
- 2.1. VC Valuation Drivers
- 2.2. Unicorns
- 2.3. Effects of Media on Organizations and Investors
- 2.4. Technology and Media
- 2.5. Media and VC Valuations
- 2.6. Hypotheses
- 3. Data and Methodology
- 3.1. Data
- 3.2. Methodology
- 3.2.1. Model (1) - LN Media Coverage / Day
- 3.2.2. Model (2) - % of Non-PE/VC Investors
- 3.2.3. Model (3) - Unicorn
- 3.3. Exceptional Media Coverage
- 4. Results
- 4.1. Univariate Results
- 4.2. Multivariate Results
- 4.2.1. Media Coverage
- 4.2.2. Non-PE/VC Investors
- 4.2.3. Unicorns
- 4.3. Robustness Section
- 4.3.1. Sample Split, Sub-Sample and Other Robustness Checks
- 4.3.2. First and Last Time Unicorns
- 4.3.3. Two-Stage Least-Squares Regression
- 4.3.4. Different Valuation Measures
- 5. Conclusion
- 6. References
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper examines the impact of media coverage on global start-up valuations between 1990 and 2015, focusing on those exceeding US$1bn - termed "unicorns." It explores the role of technology advancements in driving media coverage and the influence of media on investor behavior, particularly concerning non-PE/VC investors.
- The relationship between technological advancements and media coverage of startups
- The effect of media coverage on investor behavior, particularly non-PE/VC investors
- The influence of media coverage on start-up valuations, especially for "unicorns"
- The role of media coverage as a channel for technology advancements to impact start-up financing and valuation
- The potential overreaction and misvaluation of "unicorns" due to media coverage
Zusammenfassung der Kapitel (Chapter Summaries)
The paper begins with an introduction that defines the "unicorn" phenomenon and outlines the research questions. It highlights the rapid growth of "unicorn" start-ups and the significant increase in media coverage they receive. The introduction then establishes the paper's objective to investigate the relationship between media coverage and start-up valuations, particularly in the context of "unicorns."
Chapter 2 delves into the literature review, providing a comprehensive overview of known and potential valuation drivers in the VC area, with a particular focus on "unicorns." The chapter examines the impact of technology on media, the effects of media on organizations and investors, and the potential impact of media on valuation levels.
Chapter 3 details the data and methodology used in the study, including data sources, the selection criteria for the sample, and the models used to analyze the relationship between media coverage and start-up valuations. The chapter outlines the specific models employed to explore the impact of media coverage on start-up valuations, taking into account various factors such as non-PE/VC investors and the "unicorn" status.
Schlüsselwörter (Keywords)
The study focuses on the relationship between valuation, venture capital, "unicorns," startups, media, and technology. It investigates the impact of media coverage on start-up valuations and the role of technology advancements in driving media coverage. The study also examines the influence of media on investor behavior, particularly non-PE/VC investors, and explores the possibility of overreaction and misvaluation in the "unicorn" market.
- Quote paper
- Dr. Severin Zörgiebel (Author), 2016, The Rise of the Unicorns. How Media Affects Startup Valuations, Munich, GRIN Verlag, https://www.grin.com/document/469422
