So how about another 20 IPOs?

The third quarter is behind us, but the scores are still being totted up. This week will bring a deluge of numbers from major tech companies, helping us better understand the state of the market, for example. Another lens into the third quarter that has yet to gel are its venture capital results. We’ve covered the big numbers from the United States, Europe, Latin America, Africa and India, and we’ve looked at how far capital has extended to underrepresented groups.

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But one key area of private-market performance that we haven’t yet given enough attention to is exits. Exits, the conversion of investments into cash or another returnable asset, is the key product of private equity and its sub-asset class venture capital (no jokes about bips of AUM being the real product fit here, but you can write them for yourself).

We spend lots of time looking at venture dollars flowing into startups, and not enough, at times, on the matter of money going out. Let’s make up for a little bit of lost time, as the exit situation in the market today is very poor. Even more, key exits from Q3 2023 do more to demonstrate just how bad things are, not how much exit data may improve as the year moves toward a close.

That means venture got a few IPOs last quarter, and they were not enough. We’d need to see Q3 2023 levels of exit volume monthly for a year to just get back into the ballpark of 2021-era exit value. That’s an ocean away.

The data is not hard to parse. In the first three quarters of 2023, what PitchBook describes as “U.S. VC exit activity” was worth $9.1 billion, $6.6 billion and $35.8 billion, respectively. Clearly, the final figure is a massive improvement on what came before it, but it was largely predicated on just a handful of deals, in particular the public debuts of Instacart and Klaviyo. PitchBook’s own accounting calculates that just those two deals were worth “more than one-third of the total exit value in Q3.”

Or, if you want, each IPO that we saw last quarter that was a venture-backed exit — Arm’s IPO mattered but was hardly a venture-powered result in this incarnation — was worth about one-sixth of the quarter’s exit volume apiece. If you want to move the needle on venture-backed exit volume, then, you need more IPOs. Big ones.

What’s funny about the Q3 2023 exit data is that the quarter had two massive public debuts, which was good enough to make the quarter the best since Q4 2021. But even the best quarter since 2021 was a small fraction of the results that were once regularly racked up by American venture-backed companies.

Here’s the same dataset for 2020 and 2021:

  • Q1 2020: $16.8 billion
  • Q2 2020: $35.4 billion
  • Q3 2020: $103.3 billion
  • Q4 2020: $173.2 billion
  • Q1 2021: $125.5 billion
  • Q2 2021: $267.1 billion
  • Q3 2021:  $204.8 billion
  • Q4 2021: $198.0 billion

I wonder if the private-market world understood just how good the exit climate was back then. Probably not, given that if more folks had, we would have seen even more debuts than we did. After all, since the onset of 2022, the IPO window has largely been welded shut by rising interest rates and falling tech valuations.

You are aware of the broad arcs of the data we are discussing, but I think it is worth rubbing our noses in the figures to cement how much change we’ve undergone in our minds.

Now the really bad news. If we had Q3 2023–level venture-backed U.S. exit activity for a year, it would add up to $143.2 billion — or just over half the best quarter from 2021. If we saw Q3 2023–level venture-backed U.S. exit activity each month for a year, it would add up to $429.6 billion, less than what was recorded in just Q2 and Q3 2021, the two strongest quarters of that year.

That’s pretty bonkers: If Klaviyo and Instacart went public every month for a year along with a host of other, smaller deals, we’d see just over half of 2021’s $795.4 billion in total venture-backed U.S. exit activity. Dang.

I have to admit a certain amount of giddiness when we saw those Big Tech IPOs last quarter. But as quickly as they came, they passed, and apart from making one quarter in 2023 less shit in exit terms, they did little to really move the needle. Perhaps it’s time to realize that instead of a change in seasons, we were gifted merely a short, intense shower of liquidity and nothing more.