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Communication Dans Un Congrès Année : 2018

A real options framework for CVC Investments under technological uncertainty

Résumé

This paper studies the optimal timing of corporate venture capital in- vestments and subsequent acquisition decisions under technological uncer- tainty. We consider a large firm interested in a technology being developed by a start-up. The firm has the option of investing in the startup at an early R&D stage through a CVC, or to wait until the technology is mature before acquiring it. While an early CVC allows the firm to start integrat- ing the new technology, it induces the risk of losing the premium if the technology does not develop as expected. We formulate the problem as a real option problem where the firm aims at maximizing its profit at t = 0, considering possible CVC and acquisition decisions in the future. We solve the problem using a two-level dynamic programming algorithm and show the optimal firm decision.
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Dates et versions

hal-01823464 , version 1 (26-06-2018)

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  • HAL Id : hal-01823464 , version 1

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Linda Salahaldin, Baran Siyahhan. A real options framework for CVC Investments under technological uncertainty. 22nd Annual International Real Options Conference, Jun 2018, Düsseldorf, Germany. ⟨hal-01823464⟩
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