What If Your Valuation Process Could Improve your IRR? Fair value is normally seen as a financial reporting exercise. Something that needs to be done for the accounts, the auditors, and the LPs. But perhaps we are missing something. What if the process of determining fair value could actually help VCs make better investment decisions? There are some relatively simple ways of looking at the value of a venture investment: • Cost • Last Price Per Share (LPPS) from the most rece

There's been a lot of noise of late about IPEV-based VC fair value. Although it may seem like a huge effort to take on, at its heart, the idea is relatively simple: Understand the investment, understand what has changed, and use that change as the basis for determining what it is worth today. VCs already possess much of the knowledge needed to do that. They know why they invested. They know the company. They know what needs to go right, what could go wrong, and what has chan

When a venture fund makes an investment, it does not begin with a valuation model; it begins with an assessment of the company. Does this company fit our investment strategy? Do we believe in the management team, the technology and the market? What needs to happen over the next three to five years for this company to succeed? How much additional capital is likely to be required, and where will we sit in the cap table after future rounds? Most importantly, if the company succe

A venture investment is fundamentally a judgment about three things: ✅ The size of a potential liquidity event ✅ The probability of that liquidity event occurring ✅ The likely date of that liquidity event In other words: the Exit. At the time an investment is made, substantial work goes into forming those judgments. The investment team assesses, amongst other things, the founders, technology, product, addressable market, competitive position, customer traction, financial plan

As venture capital has matured into a true institutional asset class, expectations around fair value have evolved significantly. Fair value is no longer just a quarter end exercise, or the mechanical application of a valuation model. It is becoming an institutionalized process: repeatable, transparent, evidencebased, and capable of being clearly articulated to investment committees, auditors, LPs, and regulators. This shift is also reflected in industry guidance. Frameworks s

Most founders, operators, and even many investors understand parts of VC economics: • Dilution • Valuations • Term sheets But the real insight comes from connecting them into one system. At its core, venture economics can be understood as two sets of three: 🔹 1) Cap Table Economics — The Rules of the Game This is where value distribution is defined. 1. Share classes Common vs. Preferred (and the variations in between) 2. Shareholders Founders, investors, employees 3. Rights

In venture, the CFO’s world is built on precision. Every ownership change, every SAFE conversion, every pro rata calculation, every fund-level allocation — it all flows through the cap table. And for years, spreadsheets have been the default home for that data. But the reality is this: VC CFOs aren’t moving off spreadsheets because they’re broken. They’re moving off because they’re too slow. Not slow to open. Slow because of the hours they demand - hours spent maintaining for

It’s Easier Than Ever to Actually Be. 📝 Every year, firms sign financial statements referencing IPEV / ASC 820. Most realize they may not be fully aligned with the modern standard, and have simply continued using the familiar approach the industry has relied on for years. 🤝 Side letters smooth things over. Audit notes get tucked away. The disclosures look routine. And the signatures go on. But it’s worth asking, honestly: 🔍 You know you’re not fully IPEV / ASC 820 complian

🔑 Key Takeaways • VC valuations require a different mindset than PE. Early stage companies behave like options, not steady state businesses. • OPM, PWERM, and (rarely) CVM are the right tools for capturing uncertainty, optionality, probability, and complex capital structures. • Fair value and investment analysis share the same foundations. The same models used for ASC 820 compliance — OPM, PWERM, breakpoints, and probability based waterfalls — are also the backbone of due