How we calculate portfolio value

# How is the value of my Wefunder Portfolio calculated? After you make an investment in a company on Wefunder, the value of that investment changes over time to reflect company events and performance. Here is a detailed explanation of how your portfolio's estimated value is calculated: ## Portfolio Value Formula Your total estimated portfolio value is calculated as: **Total Estimated Value = Amount Invested + Unrealized Returns + Realized Returns** ### Amount Invested This is the total capital you have invested in the company. ### Realized Returns Realized returns reflect actual gains or losses you have received from your investments. These include: - **Cash distributions exceeding your initial investment:** These are recorded as realized gains. - **Company Failure:** This is recorded as a realized loss only after confirmation that the company has ceased all operations. Before marking a failure, Wefunder contacts the company team and reviews public records such as the company website, LinkedIn, and dissolution filings. Marking a failure is irreversible and has tax implications. - **Exits (M&A or IPO):** Gains or losses from these events are recorded based on the cash or shares distributed to you. ### Unrealized Returns Unrealized returns represent changes in the value of your investment that have not been distributed yet—these are 'paper' gains or losses. - Your unrealized return value updates only when a company raises a **subsequent priced financing round** by an institutional investor or regulated funding portal. - The calculation compares your original investment price per share to the price per share in the most recent funding round, which accounts for dilution across rounds. Unrealized returns do **not** update based on: - **Open funding rounds:** Updates occur only after rounds close. - **Subsequent unpriced convertible rounds:** For example, if you invested via a SAFE with a valuation cap, your unrealized return will not change until that SAFE converts in a priced round. - **Secondary sales:** These are private sales that may not reflect true company value. - **409a valuations or third-party valuations:** Since these are not market-driven. ## Additional Guidance for Vault Investors Wefunder applies similar valuation principles for vault investments but with specific fee treatments: ### Pre-IPO Single Asset Funds - The investment share price shown includes any underlying fees from deal partners ('all-in'). - Wefunder management fees are deducted before calculating your share count. - Carry (profit share) is only deducted after you receive realized returns exceeding your initial investment. - Therefore, unrealized returns displayed are net of fees but not net of carry. ### Multi-Asset Funds - Wefunder management fees are deducted before deploying capital. - Carry is not deducted until the fund has returned contributed capital net of management fees. - Your displayed unrealized returns are net of fees but not carry. - Your portfolio reflects your pro-rata share of both unrealized and realized returns of the fund. ## Accounting Value In addition to financing-based values, Wefunder also maintains an accounting value of assets under management. This approach applies more conservative assumptions to reflect how assets would be valued for financial reporting, emphasizing their short-term realizable value given the liquidity and structure of each investment. We apply the following adjustments: - **409A valuations:** When available, we use 409a share prices, which are independent appraisals of a company’s value. These valuations are used to set the strike price of employee stock options and are designed to be defensible to auditors and the IRS. As a result, they tend to be more conservative than venture financing rounds. - **No subsequent financing events:** If a company has not raised a priced financing round in 7+ years, we apply an 80% discount to reflect increased uncertainty and reduced visibility into current performance. - **Other liquidity adjustments:** The lack of liquidity in private markets can affect the short-term realizable value of an investment, particularly for more complex structures. - Investments with multiple layered SPVs (2+) are discounted by 50%. - Investments not available on secondary markets are discounted by 35%. - Investments that are available on select secondary markets are discounted by 25%. - Multi-asset fund investments are discounted by 20%. By understanding these principles, you can better interpret your portfolio value updates and why some investments may not show frequent valuation changes unless significant company events occur. If you want to discuss a specific investment or need details about its status, click into that investment to view more information including gains/losses and when you might see returns.