Just how backed up are the venture capital markets today? Imagine a traffic jam in which every car is worth a billion dollars of illiquid capital. Now imagine that there are 1,000 cars in that traffic jam. Finally, realize that the 1,000 billion-dollar cars in front of you are only part of the issue.
That’s what a recent data analysis indicates is happening today in one critical venture capital market. The value of the most mature startups in the United States that need to find an exit neared the $1 trillion mark through Q3 2023, according to a recent PitchBook analysis.
The figure underscores how weak the exit climate has been over the last two years and highlights the sheer mass of illiquid equity investments made into startups that call the United States home.
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The U.S.’ exit backlog is merely a part of the larger whole. PitchBook defines the “venture growth” fundraising bracket as “any financing that is Series E or later or any VC financing of a company that is at least 7 years old and has raised at least six VC rounds.”
In the U.S., that group accounts for just under $1,000 billion in unexited startup value, not counting the investments in the final quarter of 2023. If we were to include startups from the rest of the world, that number would be even larger, not to mention how much more we’d be looking at if we include slightly younger startups in the equation.
Caveats abound. Of course, not every startup that raised a “venture growth” round is still worth what it once was, and many unicorns that have held off on formally repricing themselves after 2021 could fit that bill. Moreover, since we are considering only the U.S. today, we should remember that we are not seeing the full, global picture. Still, the United States’ venture capital market is worth about half of the global whole, so when we discuss Yankee territory, we’re nevertheless talking about a huge portion of the startup market.
This morning, let’s dig into where we can find the most locked value in startup land, and just how long it might take for venture-backed tech companies that have already reached the end of their private tenures to go public.