How much would privately owned technology companies be worth, were they listed on the stock exchange, with their value being affected by the same factors that regularly influence public companies? Israeli company Zirra is trying to answer this question. The company rates the value of the leading private technology companies in Israel as if they were public companies, and comes up with some interesting results. Gett, which operates a taxi-hailing app, is worth $2 billion. "Globes" recently revealed that according to the third quarter report of one of the venture capital funds that has invested in Gett, the fund lists the Israeli company in its books at a value of $1.2 billion.
"Zirra's process for valuing companies is based solely on public sources; it does not purport to reflect the true value of the company in the books of its investors, such as venture capital funds," Zirra explains, "Zirra gives each company a hypothetical value as if it were traded on the stock exchange, excluding various effects that artificially raise the value, such as a valuation bubble and major public relations efforts. The valuation process uses artificial intelligence and machine learning technology. It includes valuation methods based on the company's internal parameters, such as estimated revenue and profit, growth rates, user traffic, number of employees, and the record of investment in the company."
This description by Zirra may explain why Landa Digital Printing, Benny Landa's digital printing company, the value of which is generally estimated at $1 billion, is assigned a $588 million price tag by Zirra.
Zirra also states, "The algorithm also takes into account external parameters for a company by using correlations between it and other companies, based on common parameters, such as field of business, the stage the company has reached, size, and its growth chart. The numbers are then calibrated with a network of experts in their field, who also help detect strong and weak points for each of the companies, and assist in the understanding of other qualitative data, such as competitors, risks, and opportunities."
Zirra takes its information from 85 different sources, which are updated daily or weekly. These include company websites, Bloomberg, SimilarWeb, LinkedIn, Google's AdWords system, the Glassdoor website, critiques by surfers on shopping websites or app stores, online sentiment analysis and press reports, academic research, and macroeconomic parameters.
Zirra itself, incidentally, is a startup. It was founded in 2014 and has a staff of 15. It has raised $2.5 million to date from, among others, former Microsoft executives Moshe Lichtman and Soma Somasegar, AOL, Prof. Dan Galai, the Singulariteam venture capital fund, and the Shaked family, the controlling shareholder in online gambling giant 888.
Published by Globes [online], Israel business news - www.globes-online.com - on January 1, 2017
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