The global stock market upheaval of the last several weeks is causing many tech venture capitalists to consider the effect of public market volatility on private investments, particularly late-stage valuations, which have been driven up by institutional funds entering the market.

One of those concerned is Mark Suster, managing director of Santa Monica’s Upfront Ventures, whose investments include multichannel networks Maker Studios and MiTú, among others.

“The one thing that has become clear to me over the last couple of months is the skepticism that many late-stage VCs (and limited partners) have had about late-stage valuations,” Suster wrote in an Aug. 24 blog post. “Deals have been massively marked up by late-stage investors. But many of these (75 percent in the case of unicorns) are not led by traditional VCs.”

For an example of this, look no further than Venice’s Snapchat. In May, the ephemeral messaging app and emerging content and payment platform closed a massive $538 million funding round that reportedly put its valuation at $16 billion and could be a prelude to an initial public offering.

Investors in that round included institutional firms such as Fidelity Investments. Snapchat already counted New York hedge fund Coatue Management as an investor. Coatue had rarely invested in tech companies until 2013, but since then it has opened a Menlo Park office and done a slew of tech venture capital deals.

So the question becomes: Should Snapchat be worried about a potentially inflated valuation that could come crashing down pre-exit?

“At some point, they’re going to have to figure out how to make money or be acquired by someone who does know how to make money,” said Peter Lee, managing partner of Beverly Hills’ Baroda Ventures.

Last month, Gawker.com released leaked documents showing Snapchat hemorrhaged nearly $130 million last year, though that figure did not include revenue generated by the Discover portal, which was launched in January. Snapchat reportedly charges advertisers $20 per 1,000 video views through Discover, and it also includes ads in its Story portal. The company is reportedly expecting $50 million in revenue this year and $200 million next.

“I don’t see a retraction of the value of Snapchat,” said Adam Lilling, founder and managing partner of Santa Monica venture capital firm Plus Capital. “The thing that’s going to impact them is speed to an IPO, or a higher valuation, and I don’t think they care right now. They’ve got enough money.”

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