A Framework for Valuation and Portfolio Optimization of Venture Capital Deals with Contractual Terms

Table 1

Strategy alignment measurement [38].

	Strategies							Strategic Misalignment Measurement
	Reactive imitation	Proactive localization	Import substitution	Creative imitation	Early market entry	Global niche	Global innovation
Dimension
Product-market
Maturity	Existing:1	Emerging:0	Existing:1	Emerging (local/exsting (global):0	Emerging:0	Existing:1	Emerging:0	0−1 = −1
Growth potential	Low:1	Moderate:2	Low:1	Moderate/high:2 /3	Very high:4	High:3	Very High:4
Market uncertainty	Low:1	Moderate:2	Low:1	Moderate:2	High:3	Moderate:2	Very High: 4
Technological capability
Technological capability, Tech. Capabilities (pioneer/follower)	Local follower:0	Local follower:0	Local pioneer:1	Local pioneer/global follower:0	Global follower:0	Global pioneer:0	Global pioneer:0	0−1 = −1
R&D investment	Low:1	Low:1	Moderate:2	Moderate:2	Moderate:2	High:3	High:3
Technological partners	–	Global:1	Local:0	Local/ global:0 or 1	Global:1	Global:1	Global:1	1−0 = 1
Priority of R&D	–	–	Cost reduction:1	Product quality/cost reduction:0 or 1	Entry timing:0	Product quality	Entry timing	0−1 = −1
Target market
Target market	Local:0	Local:0	Local:0	Local/global:0 or 1	Global:1	Global:1	Global:1	1−0 = 1
Degree of internationalization	Low:1	Low:1	Low:1	Moderate:2	High:3	High:3	High:3

For example, if the assumed strategy of a VC is Import Substitution and the strategy of an investee is Early Market Entry, the misalignment strategy for the selection is calculated in the last column. Bold columns are examples of strategies and are relevant.