Valuation Mark

A valuation mark is the per-share or total value that a fund assigns to a private holding in its Net Asset Value (NAV) calculation. For LP reporting, tax filings, and secondary transactions of fund interests, the mark represents the fund's best estimate of what its portfolio company stake is worth today.

Marks are set by fund managers using various methodologies: the last-round price (most common and simplest), a discount to last-round based on time elapsed or performance, comparables analysis, or a third-party valuation. The AICPA's guidance on fair value measurement and ILPA reporting standards govern how institutional funds should mark their books.

Illustrative example: a venture fund invested in a company at its Series A, acquiring shares at a $2.00 implied price. The company has since raised at a $10.00 per-share Series C. The fund marks its position at $10.00 (the most recent round price), which is common practice, even though that mark has not been tested in a secondary transaction.

The gotcha: marks are not market prices. A fund may carry a position at the last round price for 18 months or more with no secondary market validation. When a secondary buyer prices a transaction at a 20–30% discount to the mark, the fund may record a write-down — even though the secondary price is arguably more current and market-tested than the mark. Stale marks are a known bias in private fund reporting.