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

When people talk about valuation, the conversation often jumps straight to methodology. Should we use OPM? PWERM? Calibration to the last financing round? A market approach? But methodology is not where the valuation process starts. In reality, the calculation is one of the final steps. Before you can produce a valuation, you first need to build it. 1. Establish the capital structure Everything begins with reliable, up-to-date investment data. The cap table must accurately re

Before selecting a valuation methodology, building a model, or discussing a valuation conclusion, investors typically need to answer two very different questions: 👉 What do we know about the company? 👉 What do we know about the investment? These may sound similar. In practice, they are completely different information-gathering exercises. 1️⃣ Understanding the Company The first exercise is understanding the company's current circumstances. Questions might include: • Is the

We spend a lot of time discussing the technical side of fair value under IPEV and ASC 820:Calibration, Methodology selection, OPM, PWERM, Waterfalls and Market-participant assumptions. All of these are important. But perhaps it's worth taking a step back. Before deciding how to value an investment, firms first need to manage the valuation process itself. For many VC CFOs and finance teams, quarter-end and year-end valuations are among the most stressful periods of the report

One investment. Five valuation approaches. Values from $2.00 million to $4.09 million. Over the past few months, I’ve written extensively about venture capital fair value. We’ve explored valuation methodologies, shareholder rights, breakpoints, waterfalls, calibration, back-solve, OPM, PWERM, CVM, ASC 820, the IPEV Guidelines and AICPA guidance. Each topic is important. But none of them are the end goal. Ultimately, venture capital funds don’t report OPMs, waterfalls or calib

If you're involved in venture fund valuations, you'll probably recognise this. ✅ Someone is checking whether the cap table is up to date. ✅ Someone else is hunting for signed investment documents. ✅ There are questions about rights, SAFEs, convertibles and waterfalls. Then comes the investment review. "Can we still rely on the last funding round?" "Do we need to run a waterfall?" "The auditors mentioned OPM... but is it really necessary this quarter?" "Has there been a signif

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

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

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

It’s one of the most common shortcuts in venture. And one of the most misleading. In this carousel, we break down why that logic doesn’t hold in VC-backed companies and how value actually emerges through share class structure, breakpoints, and optionality. If you work with cap tables, fair value, or venture economics, this is worth a closer look. 👉 Swipe through to explore the evolution: #VentureCapital #FairValue #IPEV #Valuation #ASC820 #VCInsights #VCAccountingBestPracti

In public markets, valuing a company is straightforward: take the latest share price, multiply it by the number of shares, and you’ve got the market cap. That works because every share is economically identical and the market is continuously pricing the business based on real fundamentals. In venture-backed startups, that logic collapses almost instantly. Yet many founders, employees, and even some investors still fall into the trap of thinking: “Our last round was at $X per

1️⃣ There are three core methodologies venture valuations rely on Under IPEV and ASC 820, three frameworks dominate fair value analysis for VC-backed companies: PWERM, OPM, and CVM. Each approaches the valuation problem from a different angle and is suited to different circumstances. 2️⃣ PWERM models real exit scenarios The Probability-Weighted Expected Return Method (PWERM) values a company by modeling discrete outcomes, even incorporating future anticipated funding rounds,

🔹1 EV in venture isn’t observable - it’s inferred. There’s no market clearing price. Fair value reflects what a market participant would pay. 🔹2 Traditional valuation assumes fundamentals. Early stage companies rarely have revenue, margins, comps, or liquidity to anchor value. 🔹3 You’re pricing future enterprise value. It's about future upside, not current performance. 🔹4 Venture investments behave like options. Downside is capped; upside comes from low probability, hi