Really useful. Had been thinking about this as well. I am generally down on paper marks and had looked at Revenue Value as the only sensible way forward. However, hadn't pulled it together so was delighted to read yours.
Very interesting point! I can really see how this should apply for funds where the strategy is to exit at the time of an IPO. How about if the exit strategy is rather to sell secondaries in later VC rounds before an IPO or acquisition? Would it make more sense to report paper valuations or would revenue based valuations still be preferred?
How does this change with HW-heavy portfolios? I assume can't really be applied in the early days of the fund's life as the time to revenue for HW companies is generally longer, right?
It's generally more suited to software-heavy portfolios. It can be done HW-focused once post the investment period once the commercial journeys are on track. Having one standard revenue multiple may be more challenging.
Really useful. Had been thinking about this as well. I am generally down on paper marks and had looked at Revenue Value as the only sensible way forward. However, hadn't pulled it together so was delighted to read yours.
Very interesting point! I can really see how this should apply for funds where the strategy is to exit at the time of an IPO. How about if the exit strategy is rather to sell secondaries in later VC rounds before an IPO or acquisition? Would it make more sense to report paper valuations or would revenue based valuations still be preferred?
How does this change with HW-heavy portfolios? I assume can't really be applied in the early days of the fund's life as the time to revenue for HW companies is generally longer, right?
It's generally more suited to software-heavy portfolios. It can be done HW-focused once post the investment period once the commercial journeys are on track. Having one standard revenue multiple may be more challenging.