Returns are extremely skewed. In a typical portfolio of thirty companies, a majority may return less than the capital invested, while one or two outcomes generate most of the fund's profit. That distribution makes averages misleading and manager dispersion enormous, far wider than in public equity.
Funds invest over a three to four year period and hold for years afterwards, with follow-on reserves kept to support winners through later rounds. Ownership is protected or diluted depending on how those rounds are structured, and preference terms can mean the headline valuation says little about what common equity is worth.
Marks are based on the most recent financing round, so reported values can stay flat for years and then move violently. See j-curve and vintage-year.
Related: private-equity, j-curve, vintage-year, capital-call, illiquidity-premium, distributions-to-paid-in