AngelList adheres to industry standards under ASC 820 for valuing investments, with oversight from its fund administrator, Belltower Fund Group, Ltd. This rigorous approach ensures that valuations are fair, transparent, and compliant with established accounting principles.
For early-stage companies, investments are initially held at cost for the first year. During this period, valuations remain unchanged unless a priced financing round or another significant event occurs. This conservative approach reflects the inherent uncertainties in early-stage investing.
Valuations are updated in response to specific Revaluation Trigger Events such as new financing rounds, pending exits with determinable prices (like acquisitions or IPOs), material changes in company structure, or reports of impairment due to business challenges. In cases of impairment or significant business changes, valuations may be adjusted downward to reflect decreased value. Investments may be marked to zero if it is confirmed that the company has ceased operations.
Each year, AngelList and Belltower Fund Group actively contact portfolio companies to gather evidence of any valuation changes. While fund leads may inform AngelList of potential changes, they do not update valuations directly. Instead, AngelList relies on information from portfolio companies and other credible sources to ensure that valuations are based on actual changes, not on the discretion of fund leads. If direct information is unavailable, they may assess the company’s status through public filings, hiring activity, media coverage, and other indicators of ongoing operations.
While valuations are based on reliable data sources, they do not account for non-financial terms such as liquidation preferences or other contractual provisions that could affect ultimate returns. Additionally, AngelList does not independently verify all valuation data provided by portfolio companies.