Musings on Markets · 2016-10-02 · 3532d

Venture Capital Pricing vs. Valuation: Why VCs Play the Pricing Game

The author argues that venture capitalists price companies based on market comparables rather than fundamental valuations. This distinction is critical to understanding VC performance metrics and the difference between elite and average venture capital firms. The article examines four pricing methodologies used by VCs and critiques the WSJ's analysis of Andreessen Horowitz's returns.

3 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

Andreessen Horowitz Fund IRR

25-42%

range across three funds

Venture capital fund annual returns

Liquidity Discount for Private Companies

20-30+%

estimated range

Adjustment applied to public company multiples for private valuations

Uber Valuation (Saudi Sovereign Fund Round)

62.5$B

June 2016 pricing

Late-stage VC pricing reference point