Within the last years, start-ups have achieved extraordinary high valuation levels which have never been seen in such dimensions before. These high-valued start-ups with valuations above or equal to US$1bn are also called unicorns. Similarly, media coverage of start-ups has increased significantly. In this paper the impact of media coverage on global unicorn valuations between 1990 and October 2015 is empirically analyzed.
In addition, the impact of technology advancements on the media and start-ups is discussed. The here presented results indicate that technology advancements increase media coverage for start-ups. Investors which are typically not primarily active in the VC market are most affected by increasing media coverage. Start-up and especially unicorn valuations are driven to a large extent by increasing media coverage before a funding round. These results add new insights on the driving factors of start-up valuations and are consistent across a variety of different regression models and robustness checks.
Table of contents
1. Introduction
2. Literature Review
2.1. VC Valuation Drivers
2.2. Unicorns
2.3. Effects of Media on Organizations and Investors
2.4. Technology and Media
2.5. Media and VC Valuations
2.6. Hypotheses
3. Data and Methodology
3.1. Data
3.2. Methodology
3.2.1. Model (1) – LN Media Coverage / Day
3.2.2. Model (2) – % of Non-PE/VC Investors
3.2.3. Model (3) – Unicorn
3.3. Exceptional Media Coverage
4. Results
4.1. Univariate Results
4.2. Multivariate Results
4.2.1. Media Coverage
4.2.2. Non-PE/VC Investors
4.2.3. Unicorns
4.3. Robustness Section
4.3.1. Sample Split, Sub-Sample and Other Robustness Checks
4.3.2. First and Last Time Unicorns
4.3.3. Two-Stage Least-Squares Regression
4.3.4. Different Valuation Measures
5. Conclusion
6. References
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