Fair Value Isn't Just a Valuation Challenge. It's a Workflow Challenge.

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 reporting cycle.

• Information must be collected from portfolio companies.

• Cap tables need to be updated and validated.

• Financing documents must be reviewed.

• Company performance must be assessed.

• Assumptions need to be agreed upon.

• Valuations have to be calculated, reviewed, documented, and ultimately approved.

Despite the importance of the process, much of this work is still managed through spreadsheets, email chains, documents, and disconnected workflows.

And valuation workflow has largely been overlooked by software providers.

Perhaps that's not surprising.

Valuation is fundamentally more complex than many other back-office functions.

Capital calls, distributions, fundraising, and deal-flow CRM processes tend to be relatively structured.

Valuation is not.

Every company is different.

Every cap table is different.

Every capital structure is different.

Different situations may require different methodologies.

The process must bring together:

✅ Accurate data

✅ Complex financial modelling

✅ Professional judgement

✅ Strong governance

✅ A clear audit trail

This creates two related challenges.

Challenge #1: Producing the Valuation

Finance teams spend enormous amounts of time gathering information, maintaining cap tables, reviewing financing terms, running waterfalls, applying OPM and PWERM models, and generating valuation outputs.

Challenge #2: Interpreting the Valuation

The more time spent producing the numbers, the less time available to analyse them.

That means less time to:

• Challenge assumptions

• Understand portfolio developments

• Investigate valuation movements

• Support valuation committee discussions

• Exercise informed investment judgement

This is where valuation workflow platforms can help.

Maintaining accurate cap table data, tracking financing activity, automating waterfalls, and computerizing many of the underlying calculations, can remove much of the operational burden from the process.

The goal is not to replace judgement.

The goal is to give finance teams:

• More time

• Better information

• Greater confidence

• Stronger governance

So they can focus on the areas where they add the most value.

I don't normally use these posts as a sales pitch.

However, recognising that fair value is as much a workflow challenge as it is a valuation challenge may be the first step toward improving the process.

For firms facing growing valuation demands, it may be worth taking a closer look at how VCM approaches valuation workflow.

Because when the workflow improves, the valuation becomes what it should be:

An informed investment judgement, not a race against the calendar.