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Auction Bidding
The auction format Inovo employs is a modified version of the Dutch auction first used in Holland for the Tulip markets. Each bidder is an independent investor, in charge of the resources of the company. Each is told that all concepts collectively are worth a fixed amount (e.g., $10 million), but not how much each concept is worth independently. Therefore, each person must assign their perception of relative value. This allows comparison of concepts that are in a ‘pre-valuation’ state. It ensures that investors stay in the same valuation ‘ball-park’, and focus thinking on relative valuation as opposed to absolute
Once the investments have been made, the bids are collected and reconciled by computer. The auction results and a deeper analysis of its implications are then provided for discussion and exploration
valuation.
The following table shows a bidder allocating $10M across three different concepts thereby defining their assessment of the relative 'value' for each concept.
Once the bidder has determined what they believe is the relative value of each concept, they then
allocates their funds (e.g., $1 million) across the alternatives as if they were investing the organization’s resources. Just because a concept has a higher perceived ‘valuation’ doesn’t mean it’s where all the resources should be deployed. Risk, appropriateness, and diversification are all considerations in this stage. The following table shows a bidder bidding on specific concepts by allocating their $1M.
The following table shows a bidder allocating $10M across three different concepts thereby defining their assessment of the relative 'value' for each concept.
| Bidder A - Valuation Sheet | |
| Concept Name | Valuation |
| Item 1 | $2M |
| Item 2 | $3M |
| Item 3 | $5M |
| Total | $10M |
Once the bidder has determined what they believe is the relative value of each concept, they then
allocates their funds (e.g., $1 million) across the alternatives as if they were investing the organization’s resources. Just because a concept has a higher perceived ‘valuation’ doesn’t mean it’s where all the resources should be deployed. Risk, appropriateness, and diversification are all considerations in this stage. The following table shows a bidder bidding on specific concepts by allocating their $1M.
| Bidder A - Investment Sheet | |
| Concept Name | Valuation |
| Item 1 | 60% |
| Item 2 | - |
| Item 3 | 40% |
| Total | 100% |
Once the investments have been made, the bids are collected and reconciled by computer. The auction results and a deeper analysis of its implications are then provided for discussion and exploration
laschmitt |
Latest page update: made by laschmitt
, May 10 2007, 10:33 PM EDT
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