Markup
An increase in the estimated value of a fund's investment, usually after an up round.
Definition
A markup occurs when a VC fund increases the carrying value of an investment in its portfolio, typically after the company raises an up round at a higher valuation. Markups increase the fund's unrealized TVPI and are used in reports to LPs. Markups are paper gains; they only become real if the company exits at or above the marked-up value. Excessive markups during bull markets can create misleading performance metrics.
Why it matters
When your company raises an up round, the VC fund marks up its position and reports higher paper returns. This is good validation, but markups can reverse if the next round is a down round or the market corrects. Your paper equity value has the same risk.
Example
A VC invested $5M at $50M valuation (10% stake). The company raises at $200M valuation. The VC marks up their stake to $20M (10% of $200M), reporting a 4x paper return. If the company later raises at $100M, the position is marked down to $10M.