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The Mystery and Myths of Mutual Fund Markdowns

“It’s like we went public without even knowing it.”

I heard this sentiment from leaders of major private tech companies this week, as mutual funds grabbed headlines for marking down Snapchat, Blue Bottle and other massive private tech companies. All of a sudden these founders, who have been hell-bent on staying out of the public market spotlight, got a taste of what it is like to see reports of your value shifting—without any sense why.

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And while the exact logic funds are using to mark to market isn’t clear, one thing is: These private tech companies clearly didn’t anticipate the writedowns and the attention they’re getting. I think founders will think harder about taking money from mutual funds in the future.

Goes without saying that I would love to know what you think.

Matt Greenfield and Linda Holliday commented on this article.
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These private tech companies clearly didn’t anticipate the writedowns and the attention they’re getting.