A Review on Adaptability Controversies and Optimization Paths of Valuation Methods for Unprofitable Technological Enterprises: A Comparison Based on DCF, Real Options, Relative Valuation and Venture Capital Valuation Method

Abstract

In spite of substantial R&D expenditures, extended development timelines, and high uncertainty, unprofitable technology companies in biotechnology, semiconductors, and artificial intelligence (AI) have become important drivers of global innovation. As such, this paper explores these three industries and examines the adaptability and optimization paths of four mainstream valuation approaches, including discounted cash flow (DCF) valuation, real options valuation (ROV), relative valuation, and venture capital (VC) valuation. Using a core-and-supplementary structure, with biotechnology as the core focus and the other two industries as supporting cases, this study explores targeted improvements for each valuation method and verifies their applicability through theoretical analysis and empirical evidence. The results show that the four methods have significant differences in industry adaptability, thereby leading to the proposal of a stage-differentiated valuation framework. In particular, early-stage enterprises should prioritize the improved VC and ROV methods, mid-stage enterprises should focus on optimized real options valuation and risk-adjusted discounted cash flow valuation, while late-stage pre-IPO enterprises should adopt improved discounted cash flow valuation as the primary approach supplemented by improved relative valuation. This study enriches the valuation theory for unprofitable technology firms and provides practical insights for investors and enterprises.