Startup valuations reset a reflection of the investment landscape’s dynamism
Prominent investors are revising their private equity stock valuations in unlisted companies, a necessary fiduciary and regulatory procedure akin to marking to market public listed stocks. This does not herald doom; instead, it's a reflection of the investment landscape's dynamism.
Debunking The Valuation Myth
The media fervour surrounding these valuation revisions is largely unmerited for a multitude of reasons. These valuations are, at their core, theoretical. No transactions are happening at these lowered valuations — no buying or selling — thereby making them mere numbers on paper. The valuation an investor assigns is inherently subjective. Two investors in the same company, who invested at the same price two years ago, may now record wildly different valuations in their books. They might maintain the original valuation or mark it down based on their individual perspectives. These revisions do not directly impact the company's operations. Companies have already garnered funding at higher valuations.