Where private company valuations come from
Four sources — priced rounds, secondary trades, tender offers and 409A — why they disagree, and which one to trust for what.
The short answer
A private company has no continuous market price, so every valuation you see is derived from one of four kinds of evidence: a priced round, a secondary transaction between investors, a tender offer run by the company, or a 409A appraisal done for employee options. They routinely disagree, by design rather than by error — each one prices a different thing, for a different party, on a different date.
What each one actually prices
Priced round New shares issued to investors at a negotiated price, usually preferred shares carrying liquidation preferences and other rights. Firm evidence, but about a share class ordinary holders do not own. Secondary transaction Existing shares changing hands between investors, or from an employee to an investor. Closest to a market price, but the data is incomplete, reported late, and the seller may be selling for reasons unrelated to value. Tender offer The company buying shares back from employees at a price it sets and publishes, in a window it opens.
Different share classes, different dates, different motives
Preferred shares sold in a round carry protections ordinary shares do not, so they are worth more per share by construction. A 409A appraisal is valuing the ordinary shares, deliberately conservatively. A secondary trade prices whatever the seller holds, at whatever the two parties agreed, possibly months after the last round. None of these is wrong; they are answers to different questions. This is why every figure Axevil publishes carries a source and a date, and why the valuation on a position only moves when one of these events occurs.
How to read two numbers that disagree
Check the dates first. A round from eighteen months ago and a secondary trade from last month are not competing claims about the same moment; the older one is history. Check the share class. A round price is a preferred-share price, and a secondary trade is usually an ordinary-share price. Comparing them without saying so overstates the gap. Check who was motivated. An employee selling to fund a house purchase and an investor buying into a position are not negotiating from the same place, and a single trade between them is weak evidence.
Why any of this became a market
Companies now stay private long enough that most of their growth happens before anyone can buy them on an exchange: the median technology company lists around eleven years after founding, against roughly four a generation ago (Ritter, University of Florida, 2025 update). Meanwhile the liquidity that used to require a listing has moved into tender offers and secondary sales — the median gap between employee tender offers fell from 899 days in 2022 to 132 days in 2025 (Nasdaq Private Market).