From Last Round to Fair Value: Decoding VC Secondaries Valuation in a New Market Reality

An interview with Rafaël Le Saux, Director, Valuation & Modelling Advisory at PwC Luxembourg and Vice-Chairman at Luxembourg Valuation Professionals Association

The venture capital secondary market has exploded in size and complexity over the past few years. As liquidity needs rise and exit timelines stretch, both GPs and LPs are increasingly active in secondaries—yet the question of “what’s it worth?” has never been more nuanced. At the Zero to One Hundred Conference, we sat down with Rafaël Le Saux, Director at PwC Luxembourg, to unpack the art and science of VC secondary valuation in 2025. Increasingly, technology and data-driven tools are also shaping how valuations are conducted, adding both opportunities and new challenges to the process.

Market Dynamics & Benchmarks

What are the main challenges when valuing venture-backed companies?

Valuing venture-backed companies is particularly complex due to their early-stage nature, limited financial track records, and the high degree of uncertainty surrounding their markets and future performance. Recent data show that post-money valuations can significantly overstate true company value, especially for unicorns, as they often ignore the complexity of capital structures and the presence of multiple share classes with different rights and preferences. In such cases, the OPM is often one of the most appropriate valuation methodologies, as it allows for a more truthful allocation of value across different share classes by modelling the economic rights embedded in each. The prevalence of down rounds—now affecting 20% of Venture Capital -backed companies globally—underscores the need for more nuanced, scenario-based approaches that account for these complexities, rather than relying on superficial market comparisons.

Beyond technical factors, social capital, reputation, and network effects play a central role in VC dealmaking and valuation. The venture market often operates as a “status market,” where the presence of high-prestige investors can drive participation and pricing, and many VCs act as price-takers in rounds led by top-tier firms. Because these companies often lack transparent pricing mechanisms or regular secondary transactions, valuers must rely on judgment, scenario modeling, and imperfect benchmarks. As a result, the valuation process typically involves triangulating a reasonable range, rigorously testing assumptions, and clearly communicating the inherent uncertainty—making ongoing dialogue with investment teams and a deep understanding of value creation and risk mitigation essential.

When there’s no recent primary round, how do you approach valuing stakes in venture-backed companies?

When there is no recent primary financing round to serve as a valuation anchor, a rigorous, multi-faceted approach is essential to determine fair value. Rather than relying on the last price paid, market participants triangulate between market-based approaches—such as analysing recent secondary transactions and adjusting public or private comparable multiples for growth, risk, and liquidity—and income-based approaches, including discounted cash flow or scenario analysis where future cash flows are reasonably estimable. If the last round was conducted at fair value, it can be used as a calibration point, but all valuation models must be updated to reflect changes in company performance, sector multiples, and broader macroeconomic trends.

Given the lack of liquidity and infrequent transactions, qualitative factors such as management quality, market traction, competitive landscape, and the probability of future funding or exit events are as important as quantitative ones. Social capital and reputation also play a significant role: many VCs are more likely to participate in rounds led by high-status firms, sometimes with limited independent due diligence. Ultimately, the process is about blending quantitative evidence with informed professional judgment, ensuring that the resulting valuation reflects the realities of the current market rather than relying on historical benchmarks or superficial market comparisons.

Should secondary investors rely on the last round valuation, or apply discounts? What drives the size of those discounts?

Secondary investors should not rely solely on the last round valuation, as it often fails to reflect current market realities—especially in volatile or illiquid environments. While the most recent primary financing round can serve as a useful reference point, fair value must be reassessed at each measurement date, taking into account current market conditions, company performance, and any changes in rights or circumstances since the last round. The price of a recent investment is not a default; rather, it is an input to be calibrated and adjusted as appropriate.

Discounts to the last round valuation are common and are driven by several factors, including the time elapsed since the last round (with longer intervals generally resulting in larger discounts), company performance relative to expectations, prevailing market conditions, and the liquidity and rights associated with the stake being sold. The prevalence of down rounds and recaps has increased sharply—recent data show nearly 20% of rounds are down rounds. Discounts are also influenced by the reluctance of GPs to mark down portfolios, the use of stale NAVs, and sellers’ desire to avoid realising losses that could impact future fundraising. As a result, secondary pricing is often a negotiation, with buyers incorporating adjustments for illiquidity, market volatility, and portfolio-specific risks. The key is to apply a rigorous, market participant–driven approach that ensures the valuation reflects current realities rather than historical benchmarks.

What benchmarks or comps are most useful when public markets or later-stage private markets are volatile?

In periods of heightened market volatility, valuing venture-backed companies requires particular care in the selection and adjustment of benchmarks. Private transaction comparables—such as recent secondary trades in similar sectors or stages—become especially valuable as direct market evidence, while public market multiples can still provide useful context if carefully adjusted for differences in growth rates, profitability, and liquidity. However, as seen in recent years, public comps may become less reliable due to rapid shifts in sentiment and liquidity.

Sector-specific metrics remain important: for example, ARR multiples for SaaS, pipeline-adjusted value for biotech, and user or revenue multiples for fintech. Although industry-specific benchmarks can serve as a useful cross-check or sanity test, they are generally not relied upon as the primary basis for valuation. Ultimately, the goal is to synthesise all available market data and adjust for sector- and company-specific factors, while recognising the limitations of each benchmark in a volatile environment, to arrive at a fair value that reflects current market realities.

Discounts & Liquidity

How do you determine an appropriate discount to the last round? What factors matter most?

Determining an appropriate discount to the last primary round valuation in secondary transactions requires a careful assessment of both company-specific and market-wide factors. Key considerations include the time elapsed since the last round (with longer intervals generally necessitating larger discounts), company performance relative to its business plan and KPIs, prevailing market sentiment, sector trends, and the rights and liquidity associated with the stake—such as minority status, information access, and transfer restrictions. The prevalence of down rounds, recaps, and pay-to-play provisions has increased, and these terms can have a major impact on the value of different share classes and the incentives of management and investors.

Empirical evidence from recent market studies indicates that discounts for early-stage venture capital secondaries frequently range from 30% to 50% of net asset value, while late-stage transactions typically see discounts in the 25% to 35% range. Ultimately, the discount should reflect the degree of uncertainty and risk present at the time of the secondary transaction, rather than being applied as a uniform or mechanical adjustment to the last round valuation. The process is inherently a blend of quantitative analysis and professional judgment, ensuring that the resulting valuation accurately reflects current market realities and the specific circumstances of the investment

In what scenarios do you see “par” or even “premium” transactions in VC secondaries?

Par or premium transactions in venture capital secondary markets are relatively uncommon, but they do occur under specific circumstances. Such scenarios typically arise when a company is approaching a significant liquidity event, such as an imminent IPO or acquisition, or when there is competitive bidding for a highly sought-after investment opportunity. Premium pricing may also be observed when the buyer possesses unique strategic advantages or information, or when the shares in question are particularly scarce—such as those associated with top-tier funds or share classes that confer special rights.

Despite these exceptions, the prevailing trend in the current market is for secondary transactions to occur at a discount to the last primary round. This reflects the broader market environment, where uncertainty, illiquidity, and information asymmetry generally outweigh the factors that might justify par or premium pricing.

How are discounts trending now compared to 2021 or 2022?

Since the peak of 2021, discounts in the venture capital secondary market have widened considerably. Whereas discounts were often in the single digits during that period of heightened liquidity and robust exit activity, the subsequent contraction in public technology valuations and a slowdown in exit opportunities during 2022–2025 led to a marked increase in discounts, with ranges of 20% to 50% now common—particularly for early-stage or less prominent assets. For high-quality, late-stage companies, discounts have begun to narrow somewhat as the outlook for exits improves, but they remain significantly above pre-2022 levels. This trend reflects the broader recalibration of risk and liquidity premiums in the market and underscores the importance of continuously reassessing valuation assumptions in light of evolving market dynamics.

Company-Specific Considerations

How do you factor in a company’s cash burn, runway, and probability of raising the next round when setting secondary valuations?

Factoring in a company’s cash burn, runway, and probability of raising the next round is absolutely essential when setting secondary valuations. If a company is burning through cash quickly and only has a short operational runway—especially if there’s no clear path to additional funding—the risk is much higher, and this is reflected in a larger discount. The current market has shifted toward capital efficiency and a focus on companies with clear paths to profitability; investors are more selective, and companies with high burn and no clear funding path are facing much steeper discounts or may be unable to raise at all. Many companies are delaying down rounds or seeking bridge financing to avoid valuation markdowns.

Scenario analysis is typically used to map out possible outcomes, ranging from a successful up-round to a flat or down-round, or even the possibility that the company is unable to raise further capital at all. When a company is approaching a key milestone, the probability of success and its impact on valuation are explicitly considered. Firms that manage their capital efficiently and show strong unit economics can usually command tighter pricing, while those with high burn rates and little commercial traction tend to see much steeper discounts. The use of SAFEs and convertible notes remains common at the seed stage, especially as founders seek to delay price discovery in volatile markets, but this can complicate cap tables and delay valuation resets. Ultimately, the discount reflects the company’s overall risk profile and the uncertainty around future funding and business prospects.

Fund & LP-Level Issues

When acquiring LP interests in venture funds, how do you balance NAV-based pricing versus expected future performance of the underlying portfolio?

When acquiring LP interests in venture funds, the reported Net Asset Value (NAV) serves as a baseline but is rarely accepted at face value. We carefully assess the age of the NAV, the rigor and frequency of the General Partner (GP)’s valuation process, and the actual performance and exit prospects of the underlying portfolio. For example, in sectors such as AI and technology, where valuations can shift rapidly, a stale NAV may significantly overstate current value, while in life sciences or foodtech, the timing of regulatory milestones or commercialisation can introduce additional uncertainty.

Discounts are also applied to reflect illiquidity, blind pool risk, and uncertainty around future distributions—factors that can be especially pronounced in portfolios with early-stage or less liquid assets. In practice, secondary transactions for VC fund LP interests often close at 60% to 80% of reported NAV, with deeper discounts for older or more opaque portfolios. Ultimately, the final price reflects a careful balance between the fund’s reported figures, our own assessment of the risks and opportunities in the portfolio, and the specific dynamics of the sectors represented—whether that’s the volatility of AI, the binary outcomes in biotech, or the longer commercialisation cycles in foodtech. Transparency, documentation, and professional judgment are increasingly emphasised in this process.

How do you assess GP marks—and what level of scepticism do you apply?

When assessing GP marks in venture capital funds, it is essential to apply a healthy degree of professional scepticism. We evaluate the consistency of GP valuations with observable public and private comparables, as well as recent exit data, and pay close attention to the frequency and methodology of the marks—giving preference to those that are updated quarterly, reviewed by third parties, and compliant with established standards such as the IPEV Valuation Guidelines. A willingness by the GP to recognise and write down underperforming assets is also a key indicator of mark quality.

In addition to reviewing the GP’s process, we always cross-check reported valuations with our own independent models and relevant market data. This approach ensures that the reported NAV or portfolio value is not only methodologically sound but also reflective of current market realities and risks, as recommended by both IPEV and AICPA best practices. Ultimately, the goal is to ensure that the valuation process is robust, transparent, and aligned with the interests of all stakeholders.

Are there common misalignments between LP sellers and secondary buyers on valuation expectations?

Yes, misalignments are frequent in secondary transactions involving LP interests. Sellers often anchor to the reported NAV or last round valuation, while buyers incorporate adjustments for illiquidity, market volatility, and portfolio-specific risks. These gaps are most pronounced in older funds, concentrated portfolios, or those with recent markdowns, and bridging them typically requires transparent data sharing, third-party valuation support, and negotiation.

In addition to reviewing the GP’s methodology, we aim, when possible and adequate, to cross-check reported valuations with our own independent models and relevant market data. This approach ensures that the reported NAV or portfolio value is not only methodologically sound but also reflective of current market realities and risks, as recommended by both IPEV and AICPA best practices. Ultimately, the objective is to ensure that the valuation process is robust, transparent, and aligned with the interests of the diverse stakeholders, keeping in mind the structural limitations of venture-backed companies’ valuation.

Macro & Forward-Looking

How have higher interest rates and slower exit markets changed your valuation models in VC secondaries?

The exit drought, high interest rates, and macro uncertainty have led to a more conservative approach to valuation, with higher discount rates and a greater focus on interim value creation and downside protection. Discount rates have been increased to reflect higher risk-free rates and elevated risk premia, while extended exit timelines have reduced the present value of expected liquidity events. Both public and private comparable valuations—particularly in technology and growth sectors—have declined, requiring further downward adjustments to portfolio valuations.

Given these market dynamics, there is now greater emphasis on capital efficiency, cash runway, and the ability to achieve milestones. These factors are especially important in an environment where exit opportunities are less predictable and capital is scarcer, as highlighted in both the IPEV and AICPA guidelines. The result is a more conservative and risk-sensitive approach to secondary valuations, ensuring that current market realities are adequately reflected.

Do you expect secondary valuations to normalize closer to primary round prices as IPO and M&A activity picks up, or will discounts remain a structural feature?

As IPO and M&A activity resumes, it is reasonable to expect that discounts in the secondary market may narrow, particularly for high-quality assets with strong exit prospects. However, structural discounts are likely to persist due to enduring factors such as information asymmetry, illiquidity, and transfer restrictions. These structural features mean that, even in more favourable market conditions, secondary transactions will rarely achieve full parity with primary round pricing.

In practice, this is expected to result in a bifurcated market: top-tier assets with clear exit visibility and robust fundamentals may trade near par, while the majority of transactions will continue to reflect meaningful discounts. This dynamic underscore the importance of rigorous, market participant–driven valuation processes that account for both cyclical improvements in liquidity and the persistent risks inherent in secondary transactions.

Looking ahead, what role do you see AI-driven or data-driven valuation tools playing in secondaries pricing?

AI-driven and data-driven valuation tools are rapidly becoming more important in secondary market pricing, with asset managers increasingly using them for benchmarking, scenario analysis, and portfolio monitoring. Technologies such as machine learning models can significantly improve the accuracy and timeliness of NAV estimates, helping investors adjust for market volatility and information lags—especially in sectors like technology and life sciences.

Despite these advances, leading standards bodies and practitioners stress that human judgment remains essential, particularly for complex or less transparent assets. The International Valuation Standards Council (IVSC) requires that professional scepticism and oversight be maintained throughout the valuation process, and that AI tools be used as decision-support rather than as replacements for expert analysis. As a result, the future of secondary valuations will likely be defined by a hybrid approach, where technology enhances efficiency and consistency, but expert oversight ensures robustness and compliance with evolving standards.