Don’t lose sleep over Fidelity’s recent startup write-downs
This article was originally published in VentureBeat.
[Disclosure: Sohail Prasad is a prior investor in Zenefits, which is a recipient of a write-down. No non-public information is disclosed in this article, nor are we receiving compensation for writing this article.]
Over the last few days, nearly every financial and tech publication has reported that Fidelity and Blackrock have written down their holdings in various late-stage startups. For many who have been predicting doom in the startup valuation bubble, this seems like a tipping point.
These institutions made their investments after conducting extensive due diligence on the enterprise, business model, and forecasts of each company. If they believe the investment is worth significantly less now, shouldn’t that be a red flag that those startups are overvalued? Isn’t Fidelity — a multinational financial institution that has $2...
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