Limited partners
How should an LP investigate unrealized valuations at a pre-seed venture fund?
a pre-seed venture fund: Investigate unrealized values through the policy, valuation date, evidence, and review process.
Investigate unrealized values through the policy, valuation date, evidence, and review process. A recent financing price may be informative without resolving every valuation question. Distinguish investment cost, company valuation, ownership, and the carrying value reported by the fund.
Start with the decision
Request the valuation policy, changes in method, relevant transaction evidence, and the review responsibilities. Reconcile the schedule to the report where authorized. Use qualified valuation and accounting specialists for formal conclusions.
The illustrative scenario
This is an educational workbook. The company or fund and all numerical inputs below are fictional. They are not ADIN results, customer claims, market benchmarks, or a forecast.
The fictional fund plans small initial investments before companies have repeatable revenue. It expects to reserve capital for selected later rounds. The LP is reviewing whether check sizes, ownership assumptions, and support work fit the fund budget.
Early paper marks can move before meaningful liquidity. Separate investment selection, subsequent financing, ownership dilution, and cash distributions when discussing progress.
Separate distributed cash from remaining value
Use a single fictional reporting date and a simplified common denominator of $12,000,000.00 paid in. Cash distributions are $1,500,000.00 and the assumed remaining value is $16,000,000.00. These invented values are not ADIN performance, peer benchmarks, or a return forecast.
Under those definitions, the total multiple is the sum of the distributed and remaining-value multiples. A revision to remaining value changes RVPI and TVPI without changing the cash already distributed. Ask whether a real report uses gross or net figures, what fees and carry are included, and how adjustments or recycling affect its definitions.
This table does not calculate IRR: there are no dated cash flows from which to do so. Identical multiples can coexist with different timing and different uncertainty. Compare the proposed number of companies with investable capital after the model's costs and reserves. Treat a target ownership percentage as an assumption until terms support it. Reconcile actual metrics to the applicable reports and methodology with the relevant accounting or performance specialist.
| Item | Illustration |
|---|---|
| Fictional paid-in capital | $12,000,000.00 |
| Fictional distributions | $1,500,000.00 |
| Assumed remaining value | $16,000,000.00 |
| DPI: distributions / paid-in | 0.13× |
| RVPI: remaining value / paid-in | 1.33× |
| TVPI: total value / paid-in | 1.46× |
Use this worksheet
Answer the questions with a source, date, owner, and next action. Mark an unknown as unknown. Use public or permissioned information and involve a qualified specialist when a question requires expertise beyond the team’s competence.
- What method is used?
- What date applies?
- What evidence supports the mark?
- Who reviews it?
- What could cause a revision?
Questions specific to this scenario
- What is funded by the first check?
- Which follow-ons qualify?
- How are unsuccessful investments represented?
Request the portfolio model, reserve policy, ownership assumptions, dated company evidence, and a reporting sample that distinguishes marks from cash. Include companies that failed or did not raise again.
A concrete next test
Rebuild the initial-check and reserve model with a smaller final close. Ask which portfolio assumptions change and what evidence supports the ownership target. Compare early company milestones with paper marks so the LP can distinguish learning progress from cash realization.
Interpret the result
Unrealized value is not cash distributed to LPs. An upward mark can affect reported metrics while leaving liquidity and eventual proceeds uncertain, so examine both the number and the process behind it.
Compare the proposed number of companies with investable capital after the model's costs and reserves. Treat a target ownership percentage as an assumption until terms support it.
Sources and method
These primary resources provide background for the concepts. The fictional scenario, calculations, and worksheet are ADIN educational examples; the sources do not report or validate those invented results. Reviewed October 11, 2026.