Assessment of the prediction

Chamath’s prediction (made around March 19, 2020) was that over roughly the next six months, LPs and auditors would force significant markdowns in VC portfolios, causing venture capital returns to look terrible.

What actually happened (March–September 2020 and full-year 2020)

1. Only moderate early markdowns, not a later forced wave.

   • Adams Street Partners reported that Q1 2020 venture fund valuations were marked down about 10–15% on average vs. year‑end 2019, with expectations of some additional pressure in Q2, but not catastrophic writedowns. (adamsstreetpartners.com)
   • HarbourVest’s H1 2020 commentary notes “significant markdowns for some portfolio company valuations at the end of Q1,” i.e., immediately after the shock, not a distinct, larger wave six months later driven by LPs and auditors. (investegate.co.uk)
   • A later analysis of private-market valuation behavior finds that from Q2 2020 onward, private equity and venture valuations reacted quickly on the way up, not with extended markdowns, as public markets rallied. (linkedin.com)

2. By Q2–Q3 2020, venture performance was at record highs, not “terrible.”

   • eFront’s global VC performance report shows that in Q2 2020, aggregated TVPI for active VC funds hit an all‑time high of 1.64x, and remained very high (1.63x) in Q3 2020, concluding that it was “difficult to find any impact of the Covid‑19 pandemic on the performance of active VC funds.” (financialinvestigator.nl) These quarters fall squarely within the ~six‑month window after March 2020.
   • An Institutional Investor piece summarizing the same eFront data described 2020 venture performance through Q3 as “exceptional,” with returns at record levels despite the pandemic. (institutionalinvestor.com)

3. Full‑year 2020 VC returns were extraordinarily strong.

   • Cambridge Associates reports that the US Venture Capital Index returned 50.1% in calendar year 2020, its second‑best year ever, and that VC handily outperformed public markets. The same commentary notes record fundraising, strong investment pace, and plentiful exits in 2020. (cambridgeassociates.com) This is the opposite of “returns will look terrible.”

4. Survey evidence: VCs and LPs expected only mild performance impact.

   • A large VC survey (over 900 institutional VCs) analyzed in a Harvard Law School Forum article (Sept 1, 2020) found that VCs expected only a small negative effect on fund IRRs (~–1.6 percentage points) and MOICs (~–0.07), and that the vast majority still believed VC would outperform public markets. The authors conclude that “the most dire predictions of the impact of COVID‑19 on venture capital have not materialized.” (corpgov.law.harvard.edu)

Conclusion

Within six months of March 2020, there were some initial, modest markdowns, but no broad, LP/auditor‑driven wave of forced writedowns. Instead, venture valuations and performance rebounded quickly, and by both mid‑2020 and year‑end 2020, venture capital returns were among the strongest on record, not “terrible.”

Given the aggregate data on valuations and index returns, Chamath’s prediction that LPs and auditors would force large markdowns that made VC returns look very poor did not come true.