EDSAI Education: Start-up Valuation amidst nCOVID-19

Abstract

This article is a field case on business valuation woven around the dilemma for a young EdTech firm to choose between the two opportunities that came out as collaterals to the nCOVID-19 pandemic in 2020. The selection would be based on the principle of firm value maximization, for which the opportunities needed to be valued. Students will learn the application of the venture capital (VC) model used for start-up firms. Students are challenged to apply the discounted cash flow (DCF) model and the relative valuation (RV) model, and, in the process, learn to estimate the cost of equity using the capital asset pricing model (CAPM). The case provides an opportunity to learn how to build the narrative around numbers by augmenting a discussion on the impact of a pandemic on various input variables used in the valuation exercise. The case is most suitable for the course on business valuation in management and doctoral programmes.