Imagine driving down a crowded highway, stuck in a never-ending traffic jam. Each car around you is worth a staggering billion dollars of illiquid capital. And to top it off, there are 1,000 of these billion-dollar cars blocking your way. But wait, this is only a fraction of the issue.
According to a recent analysis by PitchBook, this scenario is an accurate representation of the current state of one critical venture capital market. In the United States, the value of the most mature startups in need of an exit has reached close to $1 trillion as of Q3 2023.
This jaw-dropping figure highlights the extent of the weak exit climate that has plagued the market over the past two years. It also emphasizes the immense amount of illiquid equity investments made into US-based startups.
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However, the US’ exit backlog is just a small piece of the larger puzzle. PitchBook defines “venture growth” fundraising as any financing at or above Series E or any VC financing for a company that is at least 7 years old and has raised at least six rounds of funding.
In the United States alone, this category encompasses nearly $1 trillion in unexited startup value. And this doesn’t even include the investments from the final quarter of 2023. If we were to include startups from the rest of the world, the figure would be even more staggering. And if we also consider slightly younger startups, the number would continue to grow.
But as with any data analysis, there are caveats to consider. Not every startup that has raised a “venture growth” round is still worth its initial valuation. Additionally, many unicorns have yet to officially reprice themselves after the challenges of 2021, so their current value might differ from previous figures. Furthermore, since we are focusing solely on the US market, we must keep in mind that we are not seeing the full global picture. Despite this, the US venture capital market makes up half of the global total, making it a significant contributor to the overall startup market.
So, where exactly can we find the most locked value in the startup world? And how long will it take for these venture-backed tech companies, already nearing the end of their private tenures, to go public?
We’ll need a bigger boat to navigate these vast and complex waters.
