VCs Face Questions on Valuation Gap

As mutual funds continue to mark down the value of their private tech holdings, venture capitalists say they are facing more questions from their investors about how they are valuing the same companies on their books.

The VCs predicted that mutual funds markdowns could start to pressure their own valuations if firms were found by investors to be consistently above or below mutual fund pricing. There also may now be a higher bar to justify valuations that are dramatically different, they said.

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The firm tells its investors not to put too much weight on the valuations, he added. “I really believe strongly that these interim valuations are meaningless and even the notion that you can really do any accurate mark to market with these... is kind of a joke,” he said.

Shaunak Khire commented on this article.
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“Having a third-party department within a mutual fund come up with some sort of peer-generated, short-term results-based change in valuation, it doesn’t feel like it has any particular bearing on truth, really.”