In venture capital, there comes a point where a company has not raised a new funding round for a considerable period of time. It hasn't reached an IPO or an acquisition, there is no recent market transaction to rely on, and yet the fund still has to determine a robust fair value for its investment. This is arguably the most challenging stage in venture capital valuation. The challenge isn't performing the calculations. Modern valuation platforms can do that. The real challeng

Every quarter, venture funds invest significant time and resources into financial reporting • The finance team prepares the accounts. • Auditors review the process. • LP reports are produced. • Governance meetings are held. • Documentation is completed. All of this effort ultimately supports one number: Net Asset Value (NAV) NAV influences: • LP reporting • Financial statements • Fund economics • Investor confidence It is arguably the single most important financial number a

Making Institutional-Quality Venture Fair Value Practical and Achievable - Without Making It Less Rigorous Venture Capital Is Entering a New Era Venture capital is entering a new era of accountability. LPs expect institutional-quality fair value. Auditors expect defensible methodologies. Regulators expect consistency and transparency. Funds increasingly expect to operate with the same sophistication as the institutions they resemble. Yet, for many venture funds, institutional

Most discussions about cap tables focus on accuracy. Does the cap table correctly reflect every financing round? Are all SAFEs, options, warrants, and share issuances captured? Is the ownership ledger complete and up to date? Of course, that matters. But for sophisticated venture investors, fund managers, valuation professionals, and finance teams, cap table accuracy is not the end goal. It is merely the starting point. The real objective is ensuring that the waterfall is acc

Over the past year, we’ve seen a clear shift in expectations around how Fair Value is assessed for venture-backed investments and auditors are increasingly at the center of helping clients navigate this complexity. The latest December 2025 IPEV Guidelines reinforce something many of us have been discussing for a while: headline valuation ≠ Fair Value. Simply taking last price per share × number of shares held - regardless of share class rights and preferences is no longer suf

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

We often treat fair value like a destination: a precise figure we need to “get right.” But in reality, fair value is not a number - it’s a discipline. And it starts with a shift in mindset. This is especially true when we’re dealing with VC-backed companies with complex cap tables. These aren’t simple businesses - they’re shaped by multiple share classes, liquidation preferences, conversion rights, and path-dependent outcomes. Value doesn’t sit in a single line. It’s distribu

You run deep diligence on market size, competitive dynamics, founder quality, and traction. But when it comes to returns, the thing that ultimately matters most - many investment decisions still rely on a few static exit assumptions and a spreadsheet model that’s brittle, linear, and often misleading. The reality is: Your outcome isn’t driven by valuation alone. It’s driven by the interaction of: • Structure (preferences, participation, conversion) • Dilution (future rounds y

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

Most firms treat fair value as an output. A number to report. But the more interesting question is: What can fair value teach us about our portfolio? When used well, it becomes a lens into the economics of your investments, not just an accounting exercise. It can help answer questions like: • Which investments are most sensitive to assumptions? • Which companies have the widest range of outcomes? • Where is value concentrated today? • Where is uncertainty concentrated? At the

For a long time, compliance of fair value in venture capital, has been viewed as practically too complex and difficult to follow. Not because the standards weren’t clear. Frameworks like IPEV and ASC 820 have long defined what strong fair value looks like. But translating that into a repeatable, portfolio-wide process - across companies with evolving cap tables, SAFEs, convertibles, and layered preferences hasn’t always been straightforward. That’s where things are starting t

Fair value in venture capital evolves throughout the lifecycle of an investment, and so should the valuation methodology. In practice, there are three distinct stages: 🔹 At Investment Valuation is typically anchored to the transaction price, often supported by an OPM back-solver to allocate value across share classes. 🔹 Towards Exit (no expectation of future financing rounds) Dependent on expected time to exit, methodologies range from CVM, OPM, PWERM and Hybrid. 🔹 The “In

A growing number of VC firms are reevaluating how they approach fair value, not because they’ve been doing anything “wrong,” but because the landscape is shifting in ways that make stronger valuation practices both more practical and more valuable. Technology has lowered the cost and complexity, LP expectations are rising, and industry standards are converging. For many firms, it’s becoming worth a closer look. Why It’s Becoming Worth the Effort • Standards are converging tow

🔑 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

Venture capital investments rarely follow a straight, predictable path. Instead, they move through distinct phases—moments where a company’s trajectory, risk profile, and market context shift in ways that require us to rethink fair value. Each stage demands a different lens, because what a market participant would pay (or expect) evolves as uncertainty unfolds. In this series, I’ll explore these valuation moments through the frameworks that guide our industry: IPEV , ASC 820

Founders often view >1x liquidation preferences as aggressive, but from a VC’s perspective, they’re simply a tool — and one that’s used sparingly. Most deals clear at a clean 1x. But in the moments when structure does appear, it’s there for a reason: to balance expected risk when valuation and conviction aren’t perfectly aligned. And here’s the part founders rarely internalize: A 1x return is not a win for a VC. It’s not even neutral. It’s a loss. Returning capital with no u

In startup land, few terms trigger founders more than “multiple liquidation preference.” The moment a VC asks for anything above 1x, the reflexive reaction is often: “They’re being greedy.” But like most things in venture, the reality is more nuanced — and, frankly, more interesting. I want to offer a different lens. Not to defend every term sheet ever written, but to broaden the conversation. Because sometimes a >1x preference isn’t greed at all. It’s information. 🧩 1. A H

Continuing from last week’s post on how to think about Enterprise Value in VC‑type, early‑stage companies, I want to push the conversation a step further and talk about calibration — a concept that sits at the heart of valuation in an ASC 820 / IPEV‑compliant framework. Calibration is one of those ideas that sounds abstract until you actually apply it. But in practice, it’s the discipline that keeps early‑stage valuation from drifting into storytelling. It forces you to anch

1. Early‑stage valuation celebrates what’s possible This is one of the rare places in finance where vision and artistry is a legitimate input. You’re valuing ingenuity, ambition, and the potential to reshape a market, not just the assets that exist today. 2. The absence of traditional metrics is a feature, not a flaw When revenue and profits aren’t yet the story, founders and investors can focus on insight, velocity, and vision. It relies on creativity and strategic clarity w

Over the past few posts, I’ve been unpacking fair value methodologies under IPEV and ASC 820 and how they apply to venture investments. Now feels like the right moment to zoom out and ask the bigger question: what is a company actually worth? More specifically, how should we think about enterprise value across different parts of the investment universe? In public markets and traditional private equity, the answer is almost comfortingly straightforward. These companies typical