Fair value in venture is getting a second look. Not because firms have been doing it wrong but because the landscape is changing. Standards are converging around OPM and probability based fair value methodologies. And while LP expectations haven’t fully shifted yet, the growing involvement of institutional investors, especially pension funds, is likely to raise the bar. As these LPs enter the venture market, auditors will also need to consider how they sign off on fair value

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

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

(This post is longer than the previous ones, but because OPM plays such a central role in fair value methodologies, I’m going to be especially thorough here.) As we continue our look at fair value methodologies for VCtype investments under IPEVand ASC 820, one method consistently rises to the top in conversations with practitioners. After more than 50 discussions with VCs, CFOs, controllers, and valuation professionals, the most frequently mentioned — and most frequently misu

Valuing early‑stage companies has always required judgment, but the 2025 IPEV Guidelines sharpen the boundaries around when certain methods could be used. One of the most important updates relates to the Current Value Method (CVM). Historically, IPEV allowed CVM when an exit was expected “in the near future.” The 2025 update tightens this significantly: ⚠️ CVM is now appropriate only when an exit is imminent (IPEV Dec 2025 – Page 41) This is more than a wording change — it’s

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

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

This is the first post in our mini-series on valuation myths in venture capital . We’ll explore some of the most common shortcuts used in reporting and why they don’t align with global standards like the International Private Equity and Venture Capital Valuation (IPEV) Guidelines and ASC 820 (Fair Value Measurement under US GAAP). Let’s start with one of the most persistent misconceptions: using cost as a proxy for fair value. In venture capital, valuation is more than a tech