VC & PE Glossary
What Is Write-Down?
Updated
Definition
A write-down is reducing the carrying value of an asset on the books — marking a portfolio company or loan below prior reported value when performance or market conditions deteriorate.
Useful for: Founders, Investors
A write-down lowers the book value of an asset while keeping it on the books — acknowledging impairment without fully abandoning the investment.
How it works
Venture funds mark portfolio companies to fair value each quarter under ASC 820 (US) or similar standards. Triggers for write-downs:
- Down round financing at lower price
- Prolonged underperformance vs plan
- Public comp multiple compression affecting late-stage marks
- Inside rounds with flat or punitive terms
Example: fund carried a Series B position at $20M fair value; new insider round implies $8M. Fund writes down $12M in NAV — LPs see lower TVPI until recovery or exit.
Write-down differs from write-off — write-off typically means zero or near-zero value after shutdown or total loss expectation. Write-downs can reverse via write-ups if company recovers.
Founders rarely control fund marks but feel them in follow-on appetite and internal partner attention.
Why it matters
- Founders: Lead investor write-downs precede harder board conversations — address root causes before reserve decisions.
- Investors: Consistent marking discipline matters for LP trust; delaying write-downs creates cliff events.
Common mistake
Treating unchanged headline valuation as investor confidence when funds quietly wrote down in LP reports — ask directly about current mark methodology.
Related ideas
Related terms
- Write-Off — A write-off removes or zeroes the carrying value of an investment deemed unrecoverable — when a portfolio company fails, debt defaults, or assets are abandoned.
- Write-Up — A write-up increases the carrying value of an investment on the books — reflecting higher fair value from up rounds, strong performance, or favorable public market comparables.
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Common questions
Short answers for founders, LPs, and operators