Mark-to-market to arrive at a realistic valuation and improve your fundraising odds

As the war in Ukraine rages, inflation soars and the Fed tightens the screws, the Valuations in 2022.

An extreme example of this is the valuation of Klarna, which plummeted 85% from a year ago. The "buy now, pay later" subsector is falling out of favor, but it's not the only one. Almost all tech companies are seeing their valuations decline.

The pessimism in the public market is hurting the private market. Many new seed and Series A deals are worth less than they did last year.

Why create a realistic valuation?

Tech companies that continue to hold on to their unrealistic valuations will find it very challenging.

The higher you expect your startup’s valuation to be, the lower the probability of the deal going through.

Selling your company below the last round's valuation can be painful, but closing it down and liquidating the assets will be torturous.

Unless an M&A event occurs, companies with good runway don't need to change their valuations. It is helpful for companies who don't have as much cash on hand to reexamine their valuations.

This is a good time to mark down your valuation as investors are losing money. The U.S. requires venture firms to review valuations every quarter.