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

See also write-off, write-up, and fair value marking.