Potential exit wave could improve venture liquidity but weigh on secondaries

Venture investing’s long duration and limited DPI have left investors waiting four or five years for liquidity, making distributions important to raising subsequent funds. Recent M&A, the SpaceX IPO and rumors of additional IPOs in the fourth quarter and the first half of next year suggest conditions may be changing, although the timing and scale remain uncertain.

More liquidity could return capital to pensions and endowments, giving them greater flexibility to back new funds and emerging managers and supporting venture’s long-term viability. The outlook is described as double-edged: a major liquidity environment could reduce secondary-market demand, but likely would not eliminate it because annual tender offers may continue.