Paper Mark

A paper mark is the (often flattering) valuation assigned to a private position based on the latest primary round price or the fund's internal mark — without any secondary market validation. The gains are "on paper" because no cash has changed hands to confirm that price.

Paper marks are the primary mechanism by which private fund performance can diverge from public market reality. A fund invested at a $2B valuation that has marked up to $10B based on a subsequent primary round has a 5× paper gain — but if no secondary transaction or IPO tests that price, the mark reflects only one counterparty's assessment.

Illustrative example: a VC fund invested in a company at a $500M valuation. The company later raised at $5B. The fund marks its position to $5B. Two years later, with no IPO and no secondary transactions, the fund is still carrying the position at $5B. The company's actual trajectory during those two years is unknown to outsiders.

The gotcha: paper marks are subject to the biases of whoever sets them. Founders and early investors benefit from high marks (LP optics, carried interest calculations) and have limited incentive to write down. Secondary buyers who transact at a 20–30% discount to the paper mark are not getting a "deal" — they are often just paying the more honest price. A large discount to a stale paper mark should be a signal to investigate the underlying company's trajectory, not a reason to rush a purchase.