Mark-down is a reduction in the fair value at which a fund carries a portfolio company on its financial statements or LP reports.

How it works

Private funds mark investments to market periodically—quarterly or after material events. When evidence suggests lower fair value, GPs record a mark-down:

• Priced down round or structured reset
• Deteriorating KPIs vs plan with no near-term financing
• Public comps or M&A multiples compressing the sector
• Inside round at lower valuation

Example: a fund held Series B preferred at $80M post-money valuation on its books. A new financing at $50M post triggers a mark-down to align carrying value with the transaction price, subject to ownership and preference math.

Mark-downs are accounting adjustments, not cash losses. Realized loss happens only on exit at lower proceeds. Conversely, mark-downs can reverse with subsequent mark-ups if performance recovers.

Why it matters

• Founders: Your lead’s reported value of your company affects their internal metrics and LP conversations. Proactive communication around setbacks reduces surprise marks.
• Investors: LP portfolio reviews track mark-down frequency by GP as a discipline signal—aggressive marks vs stale marks both tell stories.

Common mistake

Assuming a mark-down means the GP sold shares or lost cash. It is an unrealized valuation change until exit or write-off.

Related ideas

See also mark-up, mark-to-market, 409A valuation, and down round.