How unlisted startups’ valuations will adjust to falling share prices

YOU HAVE probably noticed that there has been something of a reckoning for the shares of fledgling technology companies in the public markets. An index of stocks that have floated via an initial public offering (IPO) within the past two years, compiled by Renaissance Capital, is down by around a third in the past year. In the private markets where venture capitalists (VCs) supply funding for startups, the term you hear for more sober valuations is “reset”. This is gentler than “reckoning”, with its overtones of punishment. In venture circles, mistakes carry no shame. If your startup is a bust, you learn lessons, move on and back a new firm.