Fair Market Value Method
This considers the fair price as the basis of portfolio valuation used where the quoted market value does not reflect the correct value of the investment. The fair value refers to the price that would be agreed upon in unrestricted market between fully informed, knowledgeable and willing parties at an without constraint. It is, thus, a subjective value.
This approach to valuation of venture capital investments is based on the assumption that is operational terms, a representative level of earning a selected and capitalized by an appropriate multiplicity capitalization rate which provides a reason return on the basis of the estimated future earnings and degree of risk.
Stages of Investment
As pointed out earlier, the methods of portfolio situation of shares depend capital investments from the viewpoint of stages of investments, the equity investments fall into three broad categories: