This term paper examines the relevance of human capital (HC) in the process of finding venture capital investors.
Since knowledge and skills became a driver for a company's competitive advantage, the relevance of HC grew according to corporate success. Remaining competitive in the innovative and rapidly growing market environment gives innovations and, thus, HC knowledge and skills an important role within a company's value creation process. Therefore, HC and qualified employees are becoming a key factor when aiming at corporate growth and searching for capital investors.
To analyse this subject, the term paper aims to screen the process of finding venture capital investors and to ascertain the role of HC in it. This will be done by first defining HC as well as venture capital and afterwards describing how these two subjects relate to each other by describing the position of HC within a business plan and taking a companies departments as orientation. Afterwards it's going to be explained how HC can be represented in key figures by applying the Saarbrücker Formel. As a practical example, the formula will be applied to the BASF Coatings AG. Finally, the results will be explained and the findings summarized and critically examined.
Table of Contents
1. Introduction
1.1 Statement of Problem
1.2 Objectives and Method of Investigation
2. Definitions
2.1 Human Capital
2.2 Venture Capital
3. Presentation of HC to Venture Capital Investors
3.1 HC importance for Venture Capital Investors
3.1.1 Management Levels
3.1.2 Research and Development
3.1.3 Marketing
3.1.4 Finance Department
3.2 Measuring Human Capital with the “Saarbrücker Formel”
3.3. Practical Application of the Saarbrücker Formel by Using the Example of the BASF Coatings AG
4. Results and Discussion
5. Conclusion and Recommendations
Objectives and Topics of the Paper
This term paper explores the critical role of human capital (HC) in the process of securing venture capital investment. By defining key terms and analyzing the significance of HC within various company departments, the study demonstrates how businesses can use quantitative methods to make intangible human assets measurable and persuasive for potential investors.
- The strategic importance of Human Capital within business plans.
- Methods for measuring Human Capital using the "Saarbrücker Formel".
- Practical application of Human Capital assessment at BASF Coatings AG.
- Evaluating the correlation between Human Capital value and investment readiness.
- Strategic recommendations for human resource improvement to attract venture capital.
Excerpt from the Book
3.2 Measuring Human Capital with the “Saarbrücker Formel”
As the importance of HC within a companies value creation process has already been pointed out in the above analysis, this abstract will explain, how HC can be transferred into key figures and thus made tangible for venture capital investors.
There are many researches, like market-, value added- and accounting based approaches in order to the measurement possibilities of HC. The following paragraph explains the possibilities of measuring HC based on the researches of Christopher Scholz, as they contain the market, value-added and accounting based perspective and represent an option for practical application. Christopher Scholz, in his researches, invented the Saarbrücker Formel that enables a monetary assessment of HC.
Applying the Saarbrücker Formel, a company can measure its HC in Euro beyond of the costs for employment.
The formula is composed of 4 components which relate each other multiplicative and additive (Cf. to Figure 1). The different variables represent a companies significant and personnel political action areas on the assumption that highly motivated employees have the ability to increase a companies value creation when they possess knowledge.
Summary of Chapters
1. Introduction: This chapter defines the problem statement and outlines the research objectives, specifically focusing on the intersection of human capital and venture capital funding.
2. Definitions: Provides fundamental definitions for Human Capital and Venture Capital to establish a theoretical basis for the subsequent analysis.
3. Presentation of HC to Venture Capital Investors: Examines how human capital is integrated into key business departments and introduces the Saarbrücker Formel as a practical measurement tool, including an application case study at BASF Coatings AG.
4. Results and Discussion: Analyzes the findings from the case study, focusing on the relationship between salary investments, qualification levels, and the resulting HC value.
5. Conclusion and Recommendations: Synthesizes the results, confirming the practicality of the formula while suggesting the need for further research regarding early-stage companies and future integration into IFRS standards.
Keywords
Human Capital, Venture Capital, Saarbrücker Formel, Business Plan, BASF Coatings AG, Intangible Assets, Employee Motivation, Knowledge Management, Corporate Growth, Investment Analysis, Human Resource Management, Competitive Advantage, Performance Measurement, Qualification, Capital Requirements.
Frequently Asked Questions
What is the primary focus of this paper?
The paper examines the relevance of human capital as a core driver of corporate success and its significance when companies seek funding from venture capital investors.
What are the central thematic fields covered?
The document covers human resource management, financial accounting of intangible assets, business planning, and the practical application of valuation models in a corporate setting.
What is the main objective of the research?
The goal is to determine how human capital can be made tangible and measurable for investors through the use of specific key figures.
Which scientific method is utilized?
The author employs the "Saarbrücker Formel" (Saarbrücken Formula), a multidimensional model that integrates market, accounting, and indicator-based approaches to quantify human capital.
What is discussed in the main part?
The main part details the role of HC in management, R&D, marketing, and finance, followed by a case study of BASF Coatings AG where the formula is applied to real-world data.
Which keywords best characterize the work?
Key terms include Human Capital, Venture Capital, Saarbrücker Formel, Business Planning, and Intangible Asset Valuation.
How does the "Saarbrücker Formel" define HC value?
It calculates HC in absolute terms by combining market-based salary data, knowledge depreciation through the accounting approach, and motivation indicators.
What conclusion does the author reach regarding the formula?
The author concludes that while the formula is a powerful tool for proving the practical applicability of HC measurement, it is complex and requires modifications tailored to specific company needs.
- Quote paper
- Oxana Lauer (Author), 2015, Relevance of Human Capital in the Process of Finding Venture Capital Investors, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/309783
