5 Valuation Takeaways Every VC Firm Should Re-Anchor On

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 conditions across the cap table. 3️⃣ Waterfalls are not valuations (except at exit) “EV then waterfall” only works when an exit is imminent. Outside of that, it zeroes optionality, overweights later rounds, and fails to reflect market participant assumptions. 4️⃣ Optionality matters Venture equity isn’t binary. Junior and common shares are not worthless just because they’re out of the money today. Fair value must reflect probability-weighted outcomes. 5️⃣ Clarity yields confidence Cap tables are no longer static records. When ownership, rights, and math work together, firms gain defensible valuations, stronger negotiations, and fewer surprises at exit. Fair value is about being accurate, credible, and aligned with how sophisticated market participants actually think.