To mark down your portfolio or not mark down your portfolio? That may be a query many enterprise capitalists are grappling with proper now.
However first, what does that imply? VCs preserve a working tab of the worth of every fund and full portfolio based mostly on the prior valuations every firm raised at. The worth of every firm typically solely will get up to date when it raises a spherical at a brand new valuation, and corporations sometimes do a full valuation audit on the finish of every 12 months.
Whereas, sure, enterprise capitalists solely have to audit the worth of their portfolios annually for his or her LPs, it’s typically thought of good religion to take action if there may be an outsized adversarial occasion impacting a selected firm or the entire portfolio.
As market circumstances proceed to worsen, and firm valuations proceed to fall, many VCs are sitting on portfolios with outdated and inflated valuations. I’d enterprise that it might be clever for buyers to have a look now and keep away from ready till the tip of the 12 months.
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