#165 Q2 PE/VC Valuation Policies & Templates (Download)

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VC Valuations at Q2

Hello friends! It’s quarterly valuation time again! We did a deep dive on this at the end of Q4 and are bringing back a lot of this analysis and insight. At that time, we shared that “it’s time to review your valuation policies and make sure they provide the right foundation for investor reporting.”

That said, a valuation policy is not something that you should be changing every quarter. You want to be thoughtful on creating the best policy for you, your investment strategy, and your investors. Then stick with it as much as you can for the long-term (i.e. years). But there’s no one right answer to PE/VC valuations!

To recap, private equity and venture capital firms are required to value their portfolio of investments quarterly. Those values are published on a schedule of investments (SOI) that is shared with investors and establishes the value of the PE/VC investment fund. At year-end, they review these valuations in detail with their auditors, who are required to sign-off on the numbers.

At the end of every other quarter, funds still publish their valuations for their investors based on their own valuation policy.

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Updating Your Policy + Examples to Download

There isn’t a one-size fits all approach to quarterly valuations! It is driven by where you invest (early vs. late-stage, etc.), the asset type, and your investor, legal, accounting, auditing requirements, and other factors. A valuation policy is an outline of the approach your fund takes to determine the fair value of its portfolio company assets for financial reporting. Fund valuation policies are usually flexible frameworks that VC funds create for their portfolio company investments. You can see more detail on this here: Post #122 on Q4 Valuations.

You can read a lot about valuation policies but ultimately you’re tasked with creating / updating it for your firm! For that, it’s helpful to start with your firm template Word / Google Doc, then have some real examples to reference.

For our paid subscribers, we’ve aggregated our top example documents (including a starter valuation policy you can use) that are easy to download and use, as well as some additional insights:

Starter Valuation Policy

If you’re forming a new fund, you need a starter valuation policy. Don’t worry, we’ve got you covered! This valuation policy details how a VC fund should approach valuations in a policy document. Instead of spinning your wheels thinking up creative language for your policy, start here!