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Assessment of rapid growth ventures, an extension of Schwartz and Moon model
Author(s) -
Afik Zvika,
Zwilling Eran
Publication year - 2018
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2873
Subject(s) - randomness , extension (predicate logic) , core (optical fiber) , sensitivity (control systems) , new ventures , operations research , econometrics , computer science , actuarial science , economics , business , engineering , finance , entrepreneurship , mathematics , statistics , telecommunications , electronic engineering , programming language
It is a challenge to incorporate randomness into financial projections that are at the core of new venture assessment. We present a model based on Schwartz and Moon ([Schwartz, E. S., 2001]) and apply it to a real firm data. We find that our 10‐year projections conform to the actual realized values. The model allows addressing crucial questions regarding the venture survival, its extreme potential outcomes, and its sensitivity to its parameters. It facilitates identifying risk drivers and assessing potential remedies. To our knowledge, we are the first to propose such a comprehensive stochastic model for risky ventures' simulation and analysis.