Last week, Silicon Valley freaked out when Fidelity lowered the value in its stake of Snapchat, Zenefits and other startups in which the investment conglomerate holds equity. In Snapchat’s case, it reduced the company’s worth from $16 billion to $12 billion. Zenefits’ $4.5 billion valuation was cut in half.
Union Square Ventures’ Fred Wilson, a longtime venture capitalist known for his early bet on Twitter, says in a blog post that these write-downs are going to keep on coming.
He argues that the “blurring of the lines between the public and private markets” means that as the economy slows down (or the air gets let out of the tech bubble, take your pick), the valuations of unicorns like Snapchat and Zenefits that have taken funding from late-stage growth giants like Fidelity are going to continue going down.
“I don’t think we will see less of these public markdowns. I think we will see more of them,” Wilson writes. “And we VCs are now facing the choice of whether to mark down our portfolios in reaction to Fidelity’s markdowns or explain to our investors and auditors why we did not do that.”
The second part of what Wilson’s talking about — VCs revising down their own portfolios in reaction to Fidelity’s actions — is something that Fortune’s Dan Primack explained neatly in an article last week. He noted that “Venture capitalists also revalue their portfolio companies — on a quarterly basis with annual auditing — but the results only are shared in strict confidence with their own investors.”
Traditionally, private market investors were able to keep information about their investments close to the vest, but companies would have to go public if they wanted to raise significant amounts of money. Wilson says that, in 2015, “There is no real difference between the public markets and the late-stage growth markets in terms of availability of capital. That was not true a decade ago.”
That’s definitely one major reason tech IPOs have slowed to a crawl this year. Fast-growing, highly-valued startups like Snapchat, Zenefits, Uber, Airbnb and others have been able to take huge chunks of late-stage growth funding from investors like BlackRock and Fidelity, whose portfolios are public.
Now that several of these companies have taken their valuation haircuts, who will be next?
You can read Fred Wilson’s full blog post here.
Update: Here’s a fun (relatively speaking) tweet to think about, with regard to what public information can tell us about private companies. The Wall Street Journal’s Rolfe Winkler points out that Expedia and Priceline stocks are getting slammed because of the Paris attacks — something that’d likely happen to Airbnb, if it were public.
This article originally appeared on Recode.net.