Metrics & Performance
Write-Down
Last updated
Quick Answer
A reduction in the carrying value of a portfolio investment — typically reflecting poor company performance or a down round financing.
A write-down (or mark-down) occurs when a VC fund reduces the carrying value of a portfolio investment on its books. Triggers for write-downs: the portfolio company raises a new round at a lower valuation (down round), significant negative events (loss of a major customer, executive departure, regulatory problem), comparable public company multiples decline significantly, or the company is clearly failing and liquidation is imminent. Write-downs reduce TVPI and NAV but don't affect DPI (which only includes realized returns). A partial write-down reduces value but retains some mark; a full write-down to zero (write-off) recognizes total loss. Writing down investments proactively — rather than maintaining inflated marks — is a sign of intellectual honesty and builds LP trust.
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Frequently Asked Questions
What is Write-Down in venture capital?
A write-down (or mark-down) occurs when a VC fund reduces the carrying value of a portfolio investment on its books. Triggers for write-downs: the portfolio company raises a new round at a lower valuation (down round), significant negative events (loss of a major customer, executive departure,...
Why is Write-Down important for startups?
Understanding Write-Down is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does Write-Down fall under in VC?
Write-Down falls under the metrics category in venture capital. This area covers concepts related to the quantitative measures used to evaluate fund and company performance.
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