Post-2024 Liquidity Changes Reshape Exit Strategies for Founders and Investors
The venture capital exit landscape is undergoing a profound transformation during the 2024-2025 period. What began as a post-pandemic rebound has evolved into a complex market reality where IPO windows remain tight, public valuations fluctuate sharply, and private market liquidity solutions rise in prominence. This evolution is reshaping how founders, investors, and capital markets navigate value realization, requiring new approaches to governance, capital efficiency, and exit strategy. The following analysis quantifies these shifts and explores their strategic implications across geographies and sectors.
The Exit Landscape by the Numbers (2018–Mid-2025)
The VC-backed IPO market collapsed from its 2021 peak of 193 deals to just 40-42 annually through 2024, the lowest level since 2011. For 2025, projections suggest modest recovery to 51-61 IPOs, with H1 2025 tracking toward approximately 21 offerings. Figma’s July 2025 IPO provided a rare bright spot, raising $1.22 billion at $33 per share and jumping 250% on its first trading day, signaling selective investor confidence in quality tech exits (PitchBook NVCA Venture Monitor Q1 & Q2 2025).
Roughly half of non-healthcare unicorn IPOs in 2024 priced below their last private round valuations, reflecting systematic valuation compression. Q2 2025 saw $69.9 billion deployed across 4,001 VC deals, down 24.8% quarter-over-quarter, though distorted by a single $40 billion OpenAI round in Q1 (PitchBook NVCA Venture Monitor Q1 & Q2 2025).
The secondary market emerged as the critical release valve. US VC secondary volumes reached approximately $60 billion annually by mid-2025, functioning as strategic liquidity tools rather than distressed exits. Tiger Global’s structured secondary exit of an AI SaaS portfolio company in 2024 at a 35% discount to last funding but providing meaningful liquidity exemplifies this evolution from crisis mechanism to deliberate portfolio management (EY Private Equity and Venture Capital Trendbook 2025).
Robust Trade Sales Continue as Strategic VC Exits
Trade sales maintained steady volume, with 205 US VC-backed M&A deals totaling $22.7 billion in disclosed value during Q1 2025. Google’s $32 billion acquisition of cloud security provider Wiz in March 2025 represented one of the largest VC-backed trade sales on record, validating strategic acquisitions as credible exit alternatives when IPO markets remain constrained.
Public market liquidity metrics provide critical context. Nasdaq maintains robust depth with 9.5-10 billion shares traded daily and $400-475 billion in daily dollar volume as of September 2025. By contrast, Saudi Arabia’s Tadawul averages $3.2-4 billion daily turnover, while London Stock Exchange equity trading hovers around £3-4 billion daily demonstrating the structural advantages US markets offer for exits(PwC Venture Capital Market Q1 2025 report).
Why IPOs Cooled and When They May Rebound
Valuation gaps between private and public markets persist as the primary friction point. Companies valued at 20x+ revenue multiples in late stage private rounds face public market investors offering 6-8x multiples for similar growth profiles, creating untenable pricing disconnects.
Macroeconomic conditions compound these challenges. Elevated interest rates throughout 2024 and into 2025 increased discount rates for future cash flows, disproportionately affecting high-growth, unprofitable companies that dominate VC portfolios. Enhanced disclosure requirements expose weaknesses that private investors overlooked, while retail investor participation remains subdued following 2022-2023 volatility (Bain Global Venture Capital Outlook 2025, EY PE & VC Trendbook 2025).
AI and machine learning companies captured a record 57.9% of total venture deal value in Q1 2025, yet even AI winners face IPO market skepticism around valuation sustainability. The technology sector shows particular stress, with life sciences maintaining somewhat better IPO reception due to clearer regulatory timelines (WaveUp VC Trends 2025, AlphaSense VC Data Platform).
Potential catalysts for IPO recovery include sustained rate cuts, proven post-IPO performance from 2024-2025 cohorts, and clearing of the substantial pipeline of over 600 IPO-ready companies. However, timing remains opportunistic rather than systematic (Bain Venture Capital Outlook, NVCA PitchBook Q2 2025).
Later stage has the largest gap between VC demand and supply
Venture capital demand/supply ratio by quarter
Note: Approximated from source visual for layout replication.
Private-Market Alternatives That Gained Traction
Secondary transactions evolved from emergency mechanisms to deliberate portfolio management tools. Continuation funds and structured secondaries provide measured partial liquidity without full exit pressure, allowing GPs to extend hold periods for promising assets while returning some capital to LPs.
Pricing dynamics improved markedly. While pandemic-era rounds saw discounts of 31-59%, recent transactions demonstrate better price discovery as buyers gained confidence and sellers established realistic expectations. Single-asset secondaries where a GP spins out one portfolio company into a new vehicle proliferated as a middle path between continued holding and forced exit.
Strategic M&A remained the most reliable exit channel, though corporate acquirers demonstrated selectivity, focusing on technology tuck-ins and talent acquisitions rather than speculative bets. Private equity growth recapitalizations created hybrid structures balancing growth capital with liquidity.
The advantages of private market exits include faster execution, reduced market timing risk, and flexibility in deal structuring. The disadvantages center on typically lower valuations than public market peaks and elimination of the liquidity multiplier effect that successful IPOs historically provided for subsequent fundraising(Jefferies Global Secondary Market Review January 2025).
Private Equity-backed Exit by Secondary Buyout
Aggregate Transaction Value and Number of Deals
(2020–2025*)
Data compiled July 1, 2025.
*Year to date through April 30, 2025.
Source: Preqin Pro.
© 2025 S&P Global.
Regional Differences: US vs Europe vs MENA
The US maintains dominance as the primary VC ecosystem, accounting for roughly 60% of global VC exit value. Deep public markets, robust M&A buyer base, and sophisticated secondary market infrastructure provide multiple pathways unavailable elsewhere(MAGNiTT H1 2025 MENA VC Report).
Europe focuses increasingly on defense and cybersecurity startups, with gradual growth in exit activity. However, European IPO markets lack depth relative to the US, forcing many high-growth companies to list on Nasdaq rather than domestic exchanges. Cross-border M&A provides critical exit liquidity, particularly for enterprise software companies.
MENA markets, particularly Saudi Arabia, benefit from sovereign wealth fund participation and ongoing Tadawul reforms aimed at increasing free float requirements and institutional participation. The region functions primarily as capital deployment rather than exit destination, with successful companies often exiting through US or European channels(Bain Global VC Outlook 2025).
Strategic Implications for Stakeholders
Extended hold periods require fundamental governance adjustments. Companies that once optimized for 5-7 year exit timelines now plan for 8-12 year journeys, demanding different capital efficiency strategies and governance structures. Median VC fund close times reached 15.3 months in Q2 2025, reflecting LP caution and delayed exit cycles.
For VCs, fund strategy requires substantial revision. Traditional 10-year fund lifecycles assumed 4-6 year hold periods before exits. Current market conditions push average holds toward 7-9 years, requiring either fund extensions, continuation vehicles, or systematic returns of capital below target multiples.
Founders face increasing pressure to demonstrate unit economics and capital efficiency metrics less emphasized during 2020-2021’s abundant capital environment. Working capital management becomes critical as external financing rounds space out, requiring disciplined expense management while maintaining growth trajectories(Venture Capital Journal on Fundraising Periods).
Looking Forward: Adapting to the New Exit Environment
The venture capital market is transitioning from temporary dislocation to structural evolution. The 2021 IPO boom now appears anomalous rather than baseline, driven by unique macroeconomic conditions unlikely to repeat. Large exit waves are anticipated only in late 2025 or 2026 as macroeconomic pressures ease.
Sector concentration will likely intensify, with AI and machine learning companies capturing record deal value share, reflecting capital flight to perceived winners in transformative technology cycles. This creates bifurcated outcomes where leading AI companies access abundant capital and favorable exit terms while other sectors face systematically constrained alternatives.
Exits
Exits are slowly starting to come back
VC exit activity
Source: PitchBook-NVCA Venture Monitor, Q1 & Q2 2025
© 2025 National Venture Capital Association (NVCA)
The most successful participants will demonstrate flexibility across exit strategies, patient capital deployment, and realistic valuation expectations. Companies that optimize governance for extended private periods while maintaining exit optionality position themselves for success regardless of market timing. Investors who structure positions allowing multiple exit pathways through secondaries, strategic sales, or eventual IPOs will outperform those dependent on single scenarios.
For founders, this means modeling multiple exit scenarios with realistic valuations, establishing governance structures suitable for 8-12 year timeframes, and maintaining relationships with potential strategic acquirers throughout the growth journey. For investors, it requires developing secondary market capabilities as core competency, setting LP expectations based on current market conditions rather than historical precedent, and evaluating portfolio companies on exit readiness across multiple scenarios rather than single path optimization.
As liquidity pathways evolve, the next phase of venture exits will favor firms that balance flexibility, patience, and scenario-based planning in their portfolio strategies. Drawing on Axial’s experience advising investors and founders across North American and MENA markets, our perspective reinforces that long-term success now hinges on evaluating portfolio companies’ exit readiness across multiple pathways, aligning valuations with market realities, and leveraging secondary market depth to sustain capital efficiency over time.
Sources
- PitchBook-NVCA Venture Monitor Q1 & Q2 2025, National Venture Capital Association (NVCA)
- EY Private Equity and Venture Capital Trendbook 2025
- PwC Venture Capital Market Q1 2025 Report
- Bain Global Venture Capital Outlook 2025
- WaveUp VC Trends 2025
- Jefferies Global Secondary Market Review January 2025
- MAGNiTT H1 2025 MENA VC Report
- Nasdaq Daily Market Summary September 2025
- Bain Private Equity & VC Outlook, Market Reports 2025
- Wellington Venture Capital Outlook 2025
- KPMG Global VC Investment Report 2025
- AlphaSense Venture Capital Trends 2025
Authors
Musa Khan Durrani, CFA
Partner
Nida Naguib, CFA, ACCA
Director
Umama Alamgir
Junior Consultant | Content
Leave a Comment