How Should Venture Funds Report Unrealized Portfolio Value?
The AICPA valuation guide overview describes guidance focused on measuring fair value for financial reporting purposes. Venture valuation is a financial-reporting process, more than an investor update. Unrealized value should be supported by a repeatable policy and current evidence.
The AICPA guide was developed by a PE/VC task force and includes valuation guidance for portfolio company investments held by investment companies within ASC 946.
LPs Need More Than One NAV Number
Unrealized value should be reported in a way that lets LPs see what is marked, why it is marked there, and how much of the fund result depends on that judgment. A single NAV number is not enough. Useful reporting separates cost, fair value, realized proceeds, valuation change, ownership, share class, last financing date, and the method used. It also shows how much value is concentrated in the largest companies.
What Belongs in the Company Schedule
| Field | Why it matters |
|---|---|
| Invested cost | Shows the cash at risk and the basis for gross MOIC |
| Current fair value | Shows the manager's present estimate |
| Realized proceeds | Separates cash received from value still at risk |
| Last financing date and terms | Shows how current the price evidence is and whether the round was structured |
| Ownership and share class | Connects headline company value to actual fund proceeds |
| Valuation method | Explains whether the mark uses a transaction, comparison, model, or blended view |
Separate Movement From Explanation
Quarterly reporting should reconcile opening NAV, new investments, realized proceeds, write-ups, write-downs, foreign-exchange movement where relevant, and closing NAV. That bridge shows what actually changed. The commentary should then explain why. A mark may rise because of a new round, better company results, or higher market multiples. Those are different forms of evidence and should not be blended into one sentence.
Concentration Changes How Much the Mark Matters
If one company represents a large share of NAV, a small change in its value can move the whole fund. LPs should see the top positions as a percentage of NAV and the effect of a reasonable write-down. For example, if the largest company is 40% of fund NAV, a 25% cut to that position reduces total NAV by 10% before any other changes. The calculation is simple, but it makes the fund's dependence on one mark clear.
Gross and Net Need Clear Labels
Company schedules often show gross value before carry and fund costs, while LP statements show net value after the allocation of fund economics. Both can be useful. Problems arise when the reader cannot tell which one is being used. Funds should also separate TVPI into DPI and RVPI. A 2.0x TVPI with 1.5x DPI is very different from a 2.0x TVPI with no cash distributed.
Questions for the Quarterly Review
- Which marks changed and why? Link the movement to evidence.
- How old is the price? Flag companies without recent financing.
- Show the largest positions and sectors.
- What has become cash? Report DPI alongside remaining value.
- What could change the mark? Name the next financing, exit, milestone, or risk.
Good valuation reporting does not remove uncertainty. It makes the uncertainty visible enough for an LP to judge it.
Separate Realized and Unrealized Value
The reported metrics should reconcile to the same underlying values. A $100 million fund with $30 million distributed and $170 million unrealized has 0.3x DPI, 1.7x RVPI, and 2.0x TVPI before considering fees, carry, and reporting policy.
AICPA describes its PE/VC valuation guide as focused on measuring fair value for financial reporting purposes for investment-company portfolio investments, including entities within ASC 946.
Explain the Mark
Moving one position from $40 million to $80 million adds 0.4x TVPI to a $100 million fund. LPs should understand the evidence behind that change.
Unrealized value should be reconciled with distributions to show DPI, RVPI, and TVPI separately.
Unrealized Value Reporting Bridge
LP reporting should show how realized cash and unrealized value combine into total value.
View bridge data and assumptions
| Metric | Amount | Multiple on $100M fund |
|---|---|---|
| DPI | $30M distributed | 0.3x |
| RVPI | $170M unrealized | 1.7x |
| TVPI | $200M total value | 2.0x |
Reconcile NAV, DPI, and Remaining Value
The calculation is more useful when every input is shown. Track the stake from entry to exit because later financings can change it.
Show How NAV Moved From the Prior Quarter
A current NAV number is easier to trust when the LP can reconcile it with the last report. The bridge should show new investments, follow-ons, distributions, realized gains or losses, company mark changes, foreign-exchange effects, and any other material adjustment. The largest movements should be explained company by company. A new financing led by an outside investor is different from a model change based on public comparisons. A flat mark can also be meaningful if the company missed a plan or used substantial cash during the quarter.
A clear roll-forward does not remove valuation judgment. It shows where judgment entered the result. That allows LPs to separate operating progress, market movement, and actual liquidity instead of treating every change in NAV as the same kind of performance.
Frequently Asked Questions
Can unrealized value be reported at cost?
Sometimes early on, but not forever: Cost may be useful shortly after investment, but funds generally need to consider current fair-value evidence over time.
Why do LPs care about RVPI?
Because it is still unrealized: RVPI may become DPI, increase, decrease, or disappear depending on company outcomes and exit markets.
Related Reading
stale portfolio valuations, partial realizations, and MOIC vs IRR.