SAFE Adjusted TVPI: How Early Stage VCs Should Communicate SAFE Note Markups to their LPs

A current topic among new’ish VCs who invest at early stages of startups – such as wonderful firms we back via Screendoor is rethinking how you communicate portfolio ‘value’ to investors. Historically you would hold your portfolio at the last priced equity round, unless there was a reason to mark it down (concern over its viability/some other negative information) or in rare cases, a reason to mark it up that wasn’t specifically related to a financing (like maybe if they turned down an acquisition offer at $X you could make the case that it’s a credible market signal?). One thing you wouldn’t do is use the cap on a SAFE as a valuation because (a) it’s not equity sale and (b) a cap isn’t a company valuation. While this might still be ‘proper’ for accounting purposes, a few realities have evolved in recent years which make it a handicap for newer early stage managers to properly demonstrate the strength of their progress to their LPs (existing and prospective). Most notably, seed isn’t…