Early-Stage Venture Capital Valuation Under Uncertainty : Evidence on valuation practices under limited financial information

Sammanfattning

Purpose: The study aims to examine how venture capitalists describe and justify earlystage valuation processes when financial information is limited or uncertain, and what factors they report as central to those decisions. Methodology: The study applies a mixed-methods research design based on a survey distributed to venture capital professionals in the Nordic market, combining validated quantitative measurement instruments, closed questions, and open-ended qualitative items, with the qualitative strand carrying the primary analytical weight. Findings: The study identified four themes in practitioners’ accounts of early-stage valuation: founding team quality as the primary substitute for financial information, intuition as a structured internal process rather than unstructured gut feeling, valuation as a context-dependent negotiated outcome, and justification work serving both educative and governance-related functions. Accounting information appeared to have a primarily symbolic role, functioning as a credibility signal rather than a direct valuation input. Given the exploratory design (n=12; VCs, angels, and founders in the Nordic market), the findings are treated as illustrative patterns broadly consistent with the study’s research questions. Research limitations: The study is limited by its reliance on a relatively small sample of respondents drawn from professional networks, which may affect the generalisability of findings. The study is further limited by its reliance on self-reported accounts of decision-making processes rather than direct observation, which is an inherent constraint of survey-based data collection. Practical implications: For practitioners, justification work may be a more central part of the valuation process than is often assumed. For founders, presenting well-structured financial information may matter more as a signal of credibility than as a direct influence on the valuation figure. Social implications: By highlighting the social and relational dimensions of early-stage valuation, the study may support more transparent investment processes, particularly for first-time founders who face significant information disadvantages. Originality: The study offers insight into how expert intuition may function as a structured internal process in early-stage valuation, and suggests that justification work serves relational functions, educative and governance-related, that have not been clearly separated in the existing literature reviewed for this study.