How to value companies in a venture capital portfolio
Ignore title, now working for a family office 8-figure venture focused fund.
For context, the fund has already deployed capital into over 50 companies. My job is to understand how much the fund is worth.
For each investment, there is a folder containing documents that show how much was invested and when. But each folder is out of date and doesn’t have much documentation other than the documents stated above.
I have made a 1-pager for each investment showing the timeline of the investments with information that I have. One problem I have is that if they invested in series A, there isn’t documentation to show if the company raised a series B, so it’s hard to understand the value of the investment. Within the 1-pager, I have made a note to say which documents are needed for us to judge the investment/portfolio value.
Please could anyone help me figure out what the usual protocol is? Would I have to email each company? If a company raised a series B, and were invested in the series A, would I take the price for that series and multiply it by the number of shares that we own? Or does each series get an update on their price as of that round?
Is this the work of a fund controller? A lawyer?
Your help is very much appreciated.
Look at pitchbook or crunch base for most recent valuation. Make sure your pref/common/other stock is corresponding. Also look for 409a.
Thanks so much for this
I have pitchbook files for each investment - I didn’t know it was trustworthy.
What’s 409A? I will google it obvs
Do I understand correctly about the share price of the new round? If I invested in series A at a price of $1, and then they raise series b at $2 - has the investment doubled in value?
Thanks
409a is an independent valuation done once a year or after major events for private companies that issue stock based compensation.
Yes. There are different classes of equity that have different values. But typically yes a share is a share. Be aware of stock splits and dilution or anything that would have changed your number or shares.
In theory there is more to value than just the shares. Like if you had anti dilution rights and now lost them because you didn’t participate in pay to play, you lost value. Or if you had board seats or gained some etc. But that wouldn’t really show up in the number you are trying to one up with.
Yes, and pretty sure Crunchbase has most 409a's as well. At least it did the last time I looked.
I’ll check it, I’m not sure I saw it when I looked but maybe I missed it as I didn’t think PitchBook was a reliable source!
Ok so there's 3 ways to do this going from most conservative to most aggressive.
FWIW most funds do M2M but I had to do all our portfolio monitoring and would write things down sooner than later so that LPs felt like we were on top of our portfolio health.
Really, really can’t thank you enough for this informative answer. Have a couple of qs on the back of it if you don’t mind.

1. 409A valuation - this was very clear and thank you for the context. I will be requesting this from the company. I know it’s conservative and usually done on a common stock Basis so I might multiply it by a number that I think represents prefs. One question: when you say get the total company valuation then find where you are on the preferred stack. Do you mind going into a little more detail? I’m very new to this and soaking it all up day by day. In some situations, based on the data that was given to me, I have a rough idea on how many shares we own of the company. I know we divide this by the fully diluted share count (common, preferred and ESOP) to find % stake in the company then multiply it by the post money valuation. Did you mean this process?
2. Yes you are completely right, I have found that we fall below some information rights thresholds so a 10yr DCF seems impossible - unless there’s another way?
I work in VC Seconadries Advisory. Lmk if you want me to pm
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please PM!
You value each position using the most recent share price from the latest financing round. Your fund keeps the number of shares it already owns. So you take:
number of shares owned × last round share price
If the company raised a Series B after your Series A investment, the Series B price becomes the reference point. You do not reprice Series A separately. The company has one cap table, and all preferred share classes update valuation based on the newest priced round.
To get missing data:
This task is normally done by a fund controller or portfolio analyst, not a lawyer.
Thank you for this, that’s very clear. I have a list of bullet points that I will email the PortCos to understand latest price and holding
Keep in mind you typically get fucked on thing like prefs as the co raises more money…
All ancillary terms have extreme value and need to be thought through.
Thanks, I was of the understanding that prefs are the hmost protected share class when a company raises more money
The liquidation prefs will supercede old money typically...
Throw a dart at a wall.
If the company says they are "AI driven," you get to keep throwing darts until you hit a valuation that no longer makes sense.
Side note but you can use multiples.vc to get comps. Super deep breakdown across tech, so very easy to build your comps set, both public and private.
PE Associate focused on tech. My take in this market fwiw - if 1&2 or 1&3 are true (or if all 3 are true), your equity is currently worthless.
(1) Company has -$5m EBITDA or worse for 3+ years in a row,
(2) ARR / revenue growth below 10%
(3) S&M spend is less than the amount of ARR/revenue added (i.e. spends $10m in S&M to add $3m in revenue or ARR)
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