Is the exit environment structurally limiting venture returns today?

Harry Stebbings · May 1, 2024

Venture doesn't work when the exit channels are closed, and today both are: IPO markets are shut and Lina Khan's FTC is crushing M&A

The asset class depends on liquidity coming back to LPs at the other end

26:17 20VC: Mark Suster on The Biggest Fundraising Lessons for VCs, Why the Correction in Venture is Still to Come, Why Private Equity Will Replace IPOs and M&A as the Exit Path & The Woke Left and a Trump Administration; What Happens?

Mark Suster · May 1, 2024

The exit environment is a worry for all of venture, not just space, because it is unclear who can buy the many $13 billion software companies that have been created

The universe of buyers for very large companies is limited

38:25 20VC: Mark Suster on The Biggest Fundraising Lessons for VCs, Why the Correction in Venture is Still to Come, Why Private Equity Will Replace IPOs and M&A as the Exit Path & The Woke Left and a Trump Administration; What Happens?

Harry Stebbings · Aug 26, 2024

The core problem in venture today is lack of liquidity from both M&A and IPOs, with LPs starved for distributions

The liquidity taps have turned off and LPs are screaming for liquidity

0:42 20VC: Why the IPO Market is not Closed | Why Revenue Multiples are BS and Founders Need to Change | Advice From Jack Ma, Jamie Dimon and Evan Spiegel | Lessons from Taking Snap & Alibaba Public with Imran Khan

Mitchell Green · Mar 28, 2025

A world where companies that could go public choose not to is very bad for the venture capital industry and its LPs

It removes the liquidity path that venture returns depend on

20:00 20VC: Why Traditional VC is Broken: How VCs Learned Nothing from 2021 | Why LPs are More Important than Founders & Advice to Emerging Managers | Bull Case for Bytedance & Why TikTok's Ban Doesn't Matter with Mitchell Green, Lead Edge Capital

Harry Stebbings · Jun 30, 2025 · hedged

The interviewer's stated concern is that structural illiquidity in venture is a real problem that seems to be getting worse in some respects

Scope: stated as his own concern

21:55 20VC: Inside KKR's Monster $8BN European Fund | The $500M Turkey Gamble That Went Wrong | Do Andreessen & General Catalyst Scare KKR? | Will AI Kill the PE Model? | Can The PE Model Survive without IPOs and Where is the Liquidity with Philip Freise

Harry Stebbings · May 18, 2026

The exit landscape is structurally constraining venture returns

IPOs require large revenue thresholds, big tech is very specific about what it acquires, and tech buyout is constrained too — Thoma Bravo just lost Medallia

Scope: framed as his worry

70:10 20VC: Turning Peter Thiel's $100K into $10M Angel Portfolio | The One Man Accelerator at The Four Seasons | Why VCs Can Be Sharks and What Founders Need to Know | Why Stocks and Cash are BS and You Should Invest in Land with Josh Browder

Harry Stebbings · May 23, 2026

The contraction in liquidity options is the underdiscussed risk: public markets are effectively closed below very large ARR, take-private buyouts have dried up, and acquirers are too narrow to absorb the universe of companies

You can't IPO at $100-300M ARR and even $1B ARR isn't interesting; Thoma Bravo-style buyouts are less likely after past deals; and the big AI acquirers are extremely specific about what they buy

Scope: flags it as his own worry that most people aren't talking about

65:08 20Sales: The $100M CRO Bubble: Why Anthropic Are Causing a Comp Crisis | Why You Should Never Hire From Salesforce or Service Now | How to Hire, Train and Forecase in a World of AI with Chad Peets and Chris Degnan

Harry Stebbings · Jun 20, 2026

The exit landscape is badly constrained today: IPOs only work at mega scale, strategic buyers are less present than ever, and buyout firms are retreating because prior take-privates like Medallia, Coupa and Anaplan look precarious.

Recent buyout-owned SaaS assets are performing poorly, scaring off financial buyers.

13:31 20VC: Why Remote Work is White Collar Fraud | Why Revenge and Patriotism are the Best Founder Traits | Two Questions Every Founder Needs to Ask | The Wild Story of Raising $1BN from Masa Son in an Hour Long Meeting with Ryan Peterson, Founder @ Flexport

Beezer Clarkson · Oct 18, 2023 · hedged

The venture industry is still fundamentally healthy and is currently bumping along the bottom of the cycle, and will recover at some point

The world is going through a rough patch rather than venture being structurally broken

Scope: timing of the recovery unknown; she doesn't know whether the back half of 2024 or 2025 is right

44:56 20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

Klaus Hommels · Nov 27, 2024

The current drought in M&A and IPO exits is not a cause for concern; exit markets will return and good companies always find buyers

Everything comes down to asset quality — good companies are always worth something and there are always people willing to engage with them, which mitigates the liquidity risk

Scope: acknowledges liquidity is better when present

21:53 20VC: Why Price Sensitivity is BS | Why "Portfolios" are Merely a Construct to Make LPs Happy | Why the Best Investment Never Happen in "Fundraising Rounds" | What Europe Needs to do to Become a Superpower Again | Klaus Hommels, Lakestar

Bucky Moore · May 5, 2025

Venture's liquidity problem is a short-term constraint, not a permanent structural challenge

Just as great entrepreneurs flock to white space, investment managers will devise new products and solutions to solve today's liquidity challenges

58:27 20VC Exclusive: Why Mega Platforms Will Win in VC | Why You Cannot Do VC If You Do Not Do Pre-Seed | Why Market Sizing is BS | Where Will Foundation Models Build/Buy Apps vs Where Will They Not with Bucky Moore

Philipp Freise · Jun 30, 2025

Liquidity droughts are cyclical, not structural — the current hangover is the clearing of 2021-22 excesses, just as in the dot-com bust, the financial crisis and the euro crisis

He has lived through three or four cycles where people declared liquidity limitless at the peak and permanently gone at the bottom, and were wrong both times

Scope: concedes the 2021-22 fundraising and investing velocity was artificial and unsustainable; acknowledges the $3tn of locked LP money

22:13 20VC: Inside KKR's Monster $8BN European Fund | The $500M Turkey Gamble That Went Wrong | Do Andreessen & General Catalyst Scare KKR? | Will AI Kill the PE Model? | Can The PE Model Survive without IPOs and Where is the Liquidity with Philip Freise

Mark Goldberg · Oct 25, 2024 · hedged

Companies staying private longer is not a real problem for early-stage investors because capital markets will create new products and secondary options that shorten effective liquidity duration

The market will evolve to offer liquidity options for late-stage private companies, giving early investors exit paths

Scope: still requires a long-term outlook; LPs told him funds rarely close before 15 years

35:57 20VC: The Truth About Multi-Stage Firms; Why Portfolio Services are for VCs not Founders | Why Politics is Rife & Decision-Making is Broken in Large VCs | Why Reserves are Bad for Founders & How Boutique Firms Will Win with Mark Goldberg @ Chemistry

Fabien Pinckaers · Feb 12, 2025

Investors do not need an IPO or trade sale for liquidity; periodic secondary transactions suffice when the business is exceptional

A really good business that is growing fast, profitable and has the best KPIs is easy to sell shares in, and all investors agreed to this from the start

Scope: transactions happen every three to four years

53:55 20VC: The $5BN Company Built from the Belgian Countryside | The Story of Odoo: The Company with No Plans to Sell, IPO & Their Billionaire Founder Who Does Not Care About Money with Fabien Pinckaers, Founder & CEO @ Odoo

Harry Stebbings · Mar 28, 2025

The harm to venture and LPs from companies staying private only holds if a mature, well-developed secondaries market fails to emerge

Scope: conditional on secondaries market development

20:04 20VC: Why Traditional VC is Broken: How VCs Learned Nothing from 2021 | Why LPs are More Important than Founders & Advice to Emerging Managers | Bull Case for Bytedance & Why TikTok's Ban Doesn't Matter with Mitchell Green, Lead Edge Capital

Chad Peets · May 23, 2026

Tender offers, ongoing financings and secondaries are a new substitute for IPO liquidity, to the point that CROs now negotiate the right to sell up to 20% of their shares annually

Without public exits, companies must replicate the liquidity employees would have gotten from going public or they have a retention problem

Scope: says he had never heard of such comp terms five years ago

65:41 20Sales: The $100M CRO Bubble: Why Anthropic Are Causing a Comp Crisis | Why You Should Never Hire From Salesforce or Service Now | How to Hire, Train and Forecase in a World of AI with Chad Peets and Chris Degnan

Kevin Ryan · Apr 10, 2024

The claim that any company can go public if it just accepts a lower price is wrong — at the margin there is little appetite and many companies that would like to be public cannot get out.

Only companies growing ~60% and profitable can always go public; the banks and market provide no window for the rest, and plenty of willing companies simply can't do it.

Scope: high-growth, profitable companies can always go public; the constraint binds 'at the margin'

48:26 20VC: Are the Best CEOs the Best Fundraisers, Are the Best Founders Insiders or Outsiders to a Problem, Why Ownership Should Not Be a Focus in VC & The Biggest Lessons Scaling MongoDB to $26BN Market Cap with Kevin Ryan, Founder @ AlleyCorp

Miles Dieffenbach · Aug 4, 2025

The IPO market is never closed — it is purely a function of price, and the blockage is that founders and investors paid far too much at the peak

There is no bid for a $100m ARR SaaS company growing 15% at breakeven free cash flow when a buyer can own Microsoft growing revenue 14% and earnings 17% with real GAAP profits, buybacks and the strongest moat in the world; sellers should compare themselves to the alternatives available to investors of the same factor

55:00 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Jerry Murdock · Aug 22, 2026

The IPO window is not closed — Cursor could have gone public last summer had it wanted to, and there is always a banker willing to take a company out

Cursor's numbers were extraordinary and it would have been received despite not being ready; the real question is whether it's the right thing to do, not whether it's possible

Scope: Requires being genuinely on track for a proper IPO

41:27 20VC: The AI Bubble Will Burst: Half the Neoclouds Will Die | China: Should We Ban Chip Exports & Be Fearful of Chinese Open-Source | Mag7: Who Dies and Who Thrives: Why Meta is Meh and Microsoft is Mega

Mark Suster · May 1, 2024

Private equity will become a primary exit path, buying large companies and rolling them up until they are big enough to IPO, because the biggest strategic buyers will struggle to acquire the biggest companies

Antitrust and scale mean the largest acquirers can't buy the largest companies, so either you get big enough to IPO or PE consolidates you

Scope: there will still be plenty of IPOs

39:07 20VC: Mark Suster on The Biggest Fundraising Lessons for VCs, Why the Correction in Venture is Still to Come, Why Private Equity Will Replace IPOs and M&A as the Exit Path & The Woke Left and a Trump Administration; What Happens?

Harry Stebbings · Oct 14, 2024

Private equity will be the core provider of liquidity for venture in the next generation.

77:41 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

David Frankel · Oct 14, 2024

PE becoming the core source of venture liquidity is already visible in practice.

He is seeing it happen in his own portfolio.

77:47 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Harry Stebbings · Feb 19, 2024

IPO markets will not open in 2024 and neither Stripe nor Databricks will go public that year, leaving no obvious source of liquidity with M&A markets also closed

Scope: stated bluntly as his own read

24:04 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital

Kevin Ryan · Apr 10, 2024

The closed IPO window is irrational and nothing investors can do anything about: companies whose numbers beat 70% of already-public companies are still told they can't go public.

It would be absurd if no apartments in New York could be sold for two years, yet that is effectively the state of the public listing market.

47:52 20VC: Are the Best CEOs the Best Fundraisers, Are the Best Founders Insiders or Outsiders to a Problem, Why Ownership Should Not Be a Focus in VC & The Biggest Lessons Scaling MongoDB to $26BN Market Cap with Kevin Ryan, Founder @ AlleyCorp

Harry Stebbings · Jun 19, 2024

Marc Cursor said on the show that private equity will be the primary buyers for the next generation of software companies

33:09 20VC: Foundation Models are the Fastest Depreciating Asset in History, Lina Kahn is a Threat to American Capitalism, PE is Not Coming to Save the M&A Market & How China Could Overtake the US in the AI Race with Michael Eisenberg

Miles Clements · Mar 9, 2026 · hedged

Now is a good time to be in the LBO business, because many beaten-up software companies that reach sustainability will find homes with buyout firms rather than IPOing

These companies need exits and the buyout market is where the homes are, even if that isn't what founders aspired to

Scope: 'probably'; applies to companies that get themselves to a sustainable place

39:14 20VC: Inside Accel's $4BN Growth Investing Machine | Cursor is Dead is Total BS: Here is Why | What Missing Rippling and ElevenLabs Taught Us | Are $2BN-$10BN IPOs Dead | Why Now is a Great Time to be Thoma Bravo with Miles Clements

Michael Eisenberg · Jun 19, 2024

The meme that private equity will be the buyer of last resort for software companies is wrong — PE will not save the M&A market

They will buy only a tiny percentage of companies, interest rates are way up so they can't borrow, and they are incredibly price sensitive

32:45 20VC: Foundation Models are the Fastest Depreciating Asset in History, Lina Kahn is a Threat to American Capitalism, PE is Not Coming to Save the M&A Market & How China Could Overtake the US in the AI Race with Michael Eisenberg

Harry Stebbings · Aug 4, 2025

Private equity is not going to save the venture liquidity problem, because founders underestimate the bar for being bought — roughly 20% growth with profitability — while many companies are growing 10% and unprofitable

The gap between acquisition-quality metrics and the actual state of most portfolio companies is large

56:28 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Harry Stebbings · Jan 12, 2026

Venture has a structural liquidity problem: compressed competitive cycles mean private companies are being eaten by new entrants before they ever go public or return capital

Companies like Snyk in cybersecurity are losing share to newer competitors while still private and never having returned money to shareholders

Scope: combined with the extension of private markets / companies staying private longer

31:04 20VC: a16z's $15BN Fundraise with Alex Rampell | The Best Companies Have Hostages Not Customers | The Best Founders Materialise Capital, Customers and Labour | Mid-Sized Funds with Die and The Future of Venture Capital

Harry Stebbings · Aug 8, 2026

The innovation cycle has accelerated so fast that category leaders are being cannibalized before they can reach a liquidity event

Airtable and Snyk are seeing growth challenges and cannibalization despite no liquidity event having occurred

Scope: not a criticism of those specific teams

39:13 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Lucas Swisher · Feb 23, 2026

Even early-stage funds should target the same platform-scale companies, because those are the only companies that can access liquidity — private via secondaries or public

Secondary markets are now a real liquidity option and early-stage funds long in these companies are rightly using them, but only mega-outcome companies have that liquidity access

30:12 Only mega outcome companies have liquidity access

Harry Stebbings · Jan 6, 2025

Venture is a very challenging asset class whose returns come from taking advantage of very constrained liquidity windows

Based on Horsley Bridge's analysis of exit markets

57:47 Venture returns derive from exploiting constrained liquidity windows

Philipp Freise · Jun 30, 2025

The structural crisis in the IPO market does not create a structural crisis for private equity, though it is a different situation for venture

Only 15% of KKR's exits over the last fifteen years were IPOs; 85% were strategic or large-corporate sales

24:19 Ipo weakness hits venture hard but barely touches pe since most exits are strategic

Harry Stebbings · Feb 2, 2026

The lack of LP liquidity is largely caused by the extension of private markets, since platform funds can supply capital to keep companies private longer

If companies stay private longer, investors must either hold longer or sell secondaries

37:21 Platform capital extending private life is what starves lps of liquidity

Arvind Jain · Jul 11, 2026 · hedged

It is easier today to build a startup and achieve a good exit than it has been at any point in the past twenty-five years

49:39 Building and exiting is easier than in decades

Paul Erlanger · Jun 27, 2026 · hedged

SpaceX's performance as the first of the big private names to market will determine whether the OpenAI and Anthropic listings go well

Retail demand is finite — roughly 30% is devoted to retail — and if people get burned on SpaceX, retail appetite for the later ones will suffer

52:25 The first mega private listing sets retail appetite for the rest

Harry Stebbings · May 8, 2024

The lack of liquidity in the venture ecosystem is deeply concerning: IPO windows remain shut, H1 2025 does not look open either, M&A is more closed than ever, and PE is stepping in as the marginal liquidity provider

38:07 Current liquidity drought across ipo and ma with pe as marginal provider is deeply concerning

Tom Hulme · May 8, 2024

The liquidity shortage is a problem primarily because large exits create a multiplier effect — spinning out cash-rich founders who start ambitious new companies — not because VCs need to raise more money

Every large successful unicorn spills out many entrepreneurs who can swing for the fences because they have money in the bank

38:36 Liquidity shortage matters for the multiplier effect of spinning out founders not vc fundraising needs

Harry Stebbings · Feb 5, 2024

Recycling capital is much harder today than five to eight years ago because M&A and IPO markets have contracted

We are not getting the M&A exits we used to, which is what allowed funds to recycle cash quickly

52:59 Recycling capital is harder today due to contracted ma and ipo exit markets

Miles Dieffenbach · Aug 4, 2025 · hedged

2025 will be the lowest year for venture fundraising in the US since 2017, and roughly since 2016 in Europe, and the root cause is lack of liquidity

The US and European fundraising data point that way, though Q3 and Q4 are still to come; it all traces back to liquidity

54:31 Fundraising volume decline traces directly to liquidity drought

Miles Dieffenbach · Aug 4, 2025

2026 will be the year the announced liquidity actually lands, because many deals are still pending approvals

Announced exits like Wiz need FTC approval, Figma hasn't gone public yet, and Dream Games needs European approval — so the cash arrives later

62:08 Regulatory approval lags defer announced liquidity to 2026

Jason Lemkin · Jan 13, 2023 · hedged

Figma's exit is helpful but probably not large enough to be a saving grace for 2023 venture distributions

Roughly $10B of venture returns against the enormous amount of fund capital now in venture may not move the needle

35:11 Even a mega exit like figma is too small to meaningfully improve 2023 venture distributions