Insights

As we continue our dive into fair value methodologies, what qualifies, what doesn’t, and how to make sense of it all, PWERM stands out as one of the most approachable tools for venture backed companies working under ASC 820 and IPEV. It’s surprisingly intuitive once you get past the jargon. At its core, PWERM isn’t just about running numbers; it’s about mapping the real paths a startup might take and understanding what each one means for shareholders and fair value. VCs alrea

In previous posts, I’ve focused on what not  to use  when valuing early‑stage, venture‑backed companies under IPEV and ASC 820. We’ve covered why l ast price per share , cost , and inappropriate use of waterfall allocations  often fail to meet fair value requirements, especially when capital structures are complex or when market conditions and company performance have shifted since the last financing. Those approaches may feel intuitive, but they rarely reflect the economics

After digging into the most common valuation shortcuts in venture capital, a few clear truths emerge: 1️⃣ Cost is not fair value Cost is historical. Fair value is current. IPEV and ASC 820 are explicit: once new information exists, holding at cost stops being conservative and starts being misleading. 2️⃣ Last price per share ≠ portfolio truth LPPS reflects one deal, at one point in time. It ignores preferences, protections, optionality, and changes in performance or market

From Clarity to Confidence In my article - VC Waterfall Calculations: The Hidden Engine Behind Cap Table Clarity , I argued that waterfall calculations are the hidden engine behind cap table clarity. But clarity alone isn’t enough. In venture finance, clarity must translate into confidence, confidence in valuations, negotiations, and ultimately, decision-making. When founders, CFOs, and investors understand not just what they own  but what they can get , they unlock a new lev

Continuing our mini-series on valuation myths in venture capital, we’ve already looked at cost and last price per share . Now let’s turn to another commonly used approach: the enterprise value (EV) waterfall. At first glance, the waterfall feels logical: start with an enterprise value, then allocate it down the capital structure according to preferences and rights. But here’s the problem: the “EV then waterfall” is not consistent with IPEV or ASC 820 fair value principles (

In Part 1 of our mini-series, we showed why cost ≠ fair value. Now let’s tackle another shortcut: using the last price per share (LPPS) from the most recent round as fair value. Why LPPS Misleads It’s just one round - not all the rounds. It ignores preferences and protections baked into that round and other rounds It treats all shares like common shares , which they’re not. It ignores upside potential across the cap table. At the end of the day, it’s simply the cost of the