A perspective from Open Doors Partners.
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Almost all of the attention paid to a private investment is spent on the decision to make it. That decision is bounded, legible, and finite. It has a date attached to it and a moment at which it is either taken or declined. What follows is neither bounded nor legible, and it is where the position spends nearly all of its life.
A listed holding is monitored by the market on the holder’s behalf. The price moves, and the movement arrives whether or not anyone was looking for it. That prompt is not analysis, and it does not substitute for judgement, but it performs one useful function consistently: it puts the position back in front of the person who owns it.
Private markets remove the prompt. A position acquired in one year can sit at the same carrying value into the next without anything having been established about whether it is still the same position. Nothing arrives to require a response. The absence is structural rather than negligent. It is a property of an asset that is not continuously priced, and it means that re-examination in private markets is always initiated rather than triggered.
The changes that matter to a private position rarely present as events.
A competitor raises at a scale that resets what the company must spend to hold its position. The company itself raises again, and the terms of that round establish rights that sit ahead of the ones already held. The cost of capital shifts across the market, and with it the range of outcomes that would once have counted as good. A management team turns over in a function that was central to the original thesis. The route to an eventual exit narrows from several plausible paths to one, and then to one that depends on a single acquirer.
Each of these is consequential. None of them announces itself to a holder. Some are discoverable only by someone who has decided in advance that they are worth tracking, and who has established what would count as a meaningful change rather than an ordinary one.
Entry flatters an investor. It is the point at which a view is expressed most clearly, and the point at which the surrounding record is at its most complete: the diligence, the terms, the considerations examined before capital moved. It is also the point at which nothing has yet been tested.
Duration tests. A thesis held for six years is subject to conditions that did not exist when it was formed, and the question of whether it still holds cannot be answered by reference to the work that produced it. That question has to be asked again, by someone, without anything compelling them to ask it.
This is why the middle years are the more revealing measure of a firm. The decision to commit is visible and comparatively easy to assess from outside. The practice of holding is neither. A position re-examined and found sound produces the same record as a position never re-examined at all, and the difference between them surfaces only when conditions turn.
Which is the argument for making it structural. Work that depends on someone remembering to do it will eventually not be done. Work with a date attached, a defined scope, and a reader on the other side of it is work that survives the years in which it feels unnecessary.
Work that produces nothing observable is work under permanent pressure. There is no external reward for confirming that a holding is still what it was believed to be, and no immediate cost to skipping the confirmation. The costs of skipping it accumulate somewhere else, later, and are difficult to attribute to the omission that produced them.
Markets make this worse at exactly the wrong moments. When conditions are strong, re-examination feels redundant; when they are loud, attention moves to what is newly available rather than to what is already held. The years in which the work is least appealing are the years in which it is most consequential, and the separation of functions that gives a structure its integrity is only as useful as the willingness to look at what those functions report.
None of this makes the middle years dramatic. They are, by construction, the part of the work with no natural narrative: no decision point, no moment of conviction, no outcome to record. They are simply the part that lasts.
A commitment is made once. A position is held every year afterwards, by someone who has to choose to look.
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How long are private positions typically held? Longer than the three-to-five years the industry planned around for decades. The median interval between investment and exit has now reached roughly six years, and the lengthening is only partly a function of a difficult exit market. Portfolios have also grown larger and more complex as the asset class has matured, so the extension is structural as well as cyclical. A position underwritten on a five-year view is now routinely held through conditions nobody modelled.
How many private companies are held beyond their expected exit window? More than 63% of active North American portfolio companies in technology, industrials and consumer sectors have been held for longer than four years. The scale of that backlog matters beyond any individual holding. When exits slow across the market at once, the companies waiting to be sold compete for a finite pool of buyers, and the ones that transact first are generally those with the least complicated story.
What does event-triggered revaluation mean? Re-marking a private holding when a defined event occurs, rather than only on the regular reporting calendar. Triggers can be company-specific, such as a change in the business itself, or market-wide, such as a significant move in the comparable set used to value it. Few firms have formally built such triggers into their process with defined thresholds, and their absence is a recognised source of stale valuations. The gap matters most where a fund reports its NAV more often than the underlying assets are valued.
Why do reported private valuations understate volatility? Because appraisal-based valuations are updated infrequently and smooth out movement that has not actually disappeared. The most cited illustration is an appraisal-valued real estate vehicle whose NAV barely moved through the COVID shock and the 2022–23 rate cycle, while comparable listed vehicles fell by roughly a third. The smoothing has downstream effects. Risk statistics calculated from smoothed valuations understate true volatility, which flatters comparisons against listed assets and can make a portfolio look better diversified than it is.
Why do later financing rounds matter to an existing holder? Because new capital frequently arrives with rights that sit ahead of the ones already held. Under stacked seniority, the most common arrangement, preferences are paid from the latest round backwards, so later investors are made whole before earlier ones receive anything. In a modest exit, that ordering determines whether earlier capital is returned at all. Structured terms of this kind became materially more common after the 2022 valuation reset, and a headline valuation reveals nothing about them.
Open Doors Partners LLC is an investment adviser operating as an exempt reporting adviser. It files reports with the SEC as an exempt reporting adviser and is not registered as an investment adviser with the SEC. Read full disclosures here.
Open Doors Partners LLC does not publicly offer or solicit investment opportunities. All investments are made through private placements under Rule 506(b) of Regulation D. Accredited investors only. Past performance is not indicative of future results.