Designing a Valuation Model for Petroleum Startups

Abstract

Development of downstream operations in the Iran's petroleum industry has always been considered as a necessity in to create more value-added. One of ways to accomplish the misson, especially in the current situation, is exploiting the capacity of petroleum startups. Considering that these companies need to be valued for financing, and since the traditional valuation methods do not provide efficiency, identification of valuation drivers for these startups as the main objective of research is an important step towards creating common literature between investors and venture capital company in order to use qualitative methods of valuation and facilitate financing process. The present study seeks to examine the influential factors affecting the valuation of petroleum startups in Iran. To this end, after reviewing theoretical foundations and interviewing with some experts and venture capitalists, environmental (contingent) effective factors were identified. Then a questionnaire was developed and distributed over statistical sample. The empirical findings revealed that the business team, size of the opportunity, marketing, sales & partner's channels, competitive environment, product power and the intellectual properties, time for idea implementation, investment rounds, as well as laws and regulations, have the most explanatory power in the valuation of Iranian petroleum startups, respectively. We provided some suggestions and policy implications in this regard.