Companies seldom volunteer to disclose lower valuations. But that may be changing in an era of rapidly falling valuations and stiff competition for talent.

In an unusual move, grocery delivery provider Instacart acted on its own initiative to cut its valuation to $24 billion, a markdown of almost 40%.

The company said in a statement, "We announced to our team that we will be aligning new equity awards—for existing employees and new hires—to an updated company valuation that reflects the current market conditions."

Investors valued the company at nearly $39 billion last March in a funding round led by backers including Fidelity Management & Research, D1 Capital Partners, Sequoia, T. Rowe Price and Andreessen Horowitz.

San Francisco-based Instacart's move to establish a more modest valuation speaks to the problems companies face on recruitment and retention if employee stock is priced too high because it limits their upside potential.

The stock market has pulled back significantly since Instacart's last valuation, pushing down market prices for comparable companies like DoorDash by nearly 50% since six months ago.

Instacart's decision to revalue the company was taken by management, but it is likely that its investors will follow suit.

"If I'm an LP of the VC in this company, I'd be asking, 'What is the impact on the series [shares] that we own in our fund?' " said David Larsen, managing director at Kroll, a firm that helps LPs and GPs value assets.

University endowments and pension plans with sizable allocations to venture capital reported extraordinarily strong returns last year.

But if Instacart's repricing is any indication, many of them will have to give back some of those gains later this year as the value of their holdings is repriced downward.

A couple of LPs have told PitchBook that they expect to see reduced marks for venture funds at the end of Q1.

Since valuation adjustments to private companies lag public markets by a quarter or two, most public pension plans aren't expected to report lower marks until later this year.

Featured image by Oscar Wong/Getty Images

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