THE APPLICATION OF RISK-BASED NEW VENTURE VALUATION TECHNIQUE FOR INTERNAL STARTUP VALUATION (CASE STUDY OF PT. TELKOM INDONESIA, TBK.)

• Main Author: Anindya, Meitha
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/41185
• Institution: Institut Teknologi Bandung

In order to restore the sales growth that had been weakened in the past year, Telkom had to expand its business. This could be done by doing major innovations in the digitalization area, which was the leading topic in the development towards Industry 4.0. Therefore, under the innovation management of Telkom, new innovations were built and nurtured using the capital provided by Telkom itself. It is hoped that these innovations, or so-called internal startup, would become the business as usual (BAU) in the future and will be run as a business under Telkom subsidiaries. One of the innovations that have been developing was Company A which provide services in the gaming industry. However, within the past months, the revenue of Company A had been stagnant and thus, new business model was needed to be developed. Since this company was already in the probation stage, it will soon be decided whether this company would worth to be nurtured by Telkom subsidiary or discontinued. Hence, to overcome this issue, valuation must be made. Here, the use of risk-based new venture valuation technique was expected to be able to gain result that was objectified based on both side’s point of view. The technique itself used the real option theory in order to include the risk factor that would be carried by the investors within the development of the startup. Therefore, since the gaming market industry was considered to be a newly developing market in Indonesia, this technique was considered to be relevant to figure out how to capture the high risk that the investor hold. In this paper, it was shown that the risk-based new venture valuation technique was able to combine both the investor and the innovator sides point of view by taken into account both the risk that the investor hold and the potential of the company. Using this technique, the result shows that the projected sales growth of Company A from year 1 until year 5 would be 668%, 187%, 237%, and 60% respectively. Meanwhile, the valuation result of Company A was 23.5, 63.6, 178, and 519.3 all in billion IDR for each milestone accomplished. In addition, the summary of the capital needed by Company A after the first year of probation time was resulted in 2.1% of the total value it will gained after the 3rd milestone was accomplished. Using this result, it can be concluded that Company A was having a great potential and was a good deal for a take over. This was due to the rapid growth that was projected to be obtained within the five years of projection and also the economical value that would be gained by the future holding company as the future investor compare to the valuation.