14 Technology Valuation

🎯 Session Objectives

• Understand the methodologies used to determine how much a technology is worth.

• Calculate a basic financial projection for your technology-based company.

• Apply Net Present Value (NPV) concepts to a tech project.

---

🧠 Theoretical Content

1. Why Value Technology?

To get funding (from investors, banks, or Minciencias), you must answer: "How much money do you need, and what is the projected return on that investment?"

2. Valuation Methods

There are three standard ways to value an intangible asset (like a new software or a patent):

1. Cost Approach: How much did it cost to build? (Hours of Python coding + Arduino parts). This is the minimum baseline.

2. Market Approach: What are similar startups or technologies selling for? (Using benchmarking from Week 3).

3. Income Approach (DCF - Discounted Cash Flow): Projecting future revenues and discounting them to today's value (NPV). This is the most common for investors.

3. The Income Approach (Simplified)

To use the income approach, you must project your business model into the future (usually 3-5 years).

• Initial Investment: The cost to finish TRL 9 and launch.

• Cashflows: Expected sales minus expected operational costs (Cloud servers, maintenance).

• Discount Rate: The risk factor. High risk tech uses a high discount rate (usually 20-40%).

---

🛠️ Class Activity: Projected Cash Flow

Goal: Create a 3-year cash flow projection for your project.

1

Estimate Initial Costs (Year 0)

What do you need to launch a beta product to the market? (Patenting fees, server setup, manufacturing 10 units).

2

Project Sales (Years 1-3)

Based on your Lean Canvas pricing, how many units/subscriptions will you realistically sell?

3

Calculate NPV

Use Excel or Google Sheets to calculate the Net Present Value. Is the project financially viable?

Concept	Year 0	Year 1	Year 2	Year 3
Revenues	$0	$50,000	$150,000	$300,000
Costs (Servers, parts)	$10,000	$20,000	$60,000	$100,000
Net Cash Flow	-$10,000	$30,000	$90,000	$200,000

---

📚 Assignments

• Financial Model: Submit a clean, standardized 3-year Excel projection for your project.

• Review Minciencias MGA: Look up the "Metodología General Ajustada" format used in Colombia for public tech funding.